New IRS rules for backup withholding on third party network transactions
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Table of Contents
The IRS has issued final regulations regarding “backup withholding.” This is a process where a payer takes a certain percentage of a payment and sends it directly to the IRS to ensure taxes are covered.
Why it matters: This is an administrative update to ensure tax collection rules keep up with how digital and third-party payment networks operate. It primarily affects the internal compliance procedures of payment processors.
Who it affects
- Third-party settlement organizations and payment processors
This action was taken by the Treasury Department and IRS; readers should consult the official Federal Register document before making financial or compliance decisions.
Agency: Treasury Department, Internal Revenue Service
Source: Federal Register — read the official document