Washington, D.C. — August 10, 2026
New Internal Revenue Service (IRS) administrative guidance effective for the 2026 tax year reduces the reporting threshold for non‑US online merchants earning US‑sourced income from the former $20,000 annual revenue mark down to $600 USD per year. Every overseas seller receiving payments from United States payment processors, marketplaces or direct‑store transactions above that threshold will receive information returns such as Form 1099‑K and must file appropriate United States tax disclosures.The rule change affects nearly all cross‑border businesses selling to American shoppers, regardless of whether they ship via direct post, FBA or private overseas warehouses. Receiving a 1099 form does not automatically mean income is taxable; tax liability depends on treaty provisions, business structure, permanent‑establishment status and deductible business expenses. However, filing deadlines are strict, and failure to submit required paperwork cantrigger notices, back‑tax assessments and penalties ranging from 20 percent to 40 percent of undeclared income.
Confusion remains widespread among smaller merchants based outside North America. Many operators previously assumed they only needed domestic tax filings in their home country and ignored United States reporting duties. Tax advisors warn that platform‑issued withholding does not satisfy filing obligations on its own. Sellers must maintain organised records of shipping costs, warehouse charges, advertising spend, product‑purchase invoices and refund transactions to calculate net profit accurately.Industry associations have requested extended grace periods and simplified filing pathways for micro‑sellers, but the IRS has stated it will enforce the new threshold starting this tax season. Cross‑border operators are urged to arrange professional tax advice well ahead of year‑end to avoid costly compliance mistakes.