TITLE: 2026 US Tax Rules for International Sellers: 1099-K, Remittance Tax, and Form 5472 Updates
If you sell into the US from the UK or another country, several 2026 rules require immediate attention.
The federal Form 1099-K threshold has reverted. A new 1% remittance transfer tax applies to certain physical-money transfers. Foreign-owned US LLCs must also maintain accurate Form 5472 and foreign tax identification number records.
This daily update explains what has changed and what you should do next.
1. Form 1099-K threshold returns to $20,000 and 200 transactions
The One, Big, Beautiful Bill retroactively reinstated the previous federal threshold for third-party settlement organisations (TPSOs).
For 2026, a TPSO generally must issue Form 1099-K when both conditions apply:
- Gross reportable payments exceed $20,000.
- The number of reportable transactions exceeds 200.
This applies to many marketplace and payment network transactions, including certain Amazon, PayPal and other platform payments.
The IRS confirmed this position in Fact Sheet FS-2025-08 and its Form 1099-K FAQs.
Payment card transactions follow a different rule
Do not apply the $20,000 and 200-transaction test to payment card transactions.
Credit and debit card payments remain reportable for any amount. There is no federal minimum threshold or de minimis exception for payment card transactions.
This means a Shopify seller could receive a Form 1099-K for card payments even when the total is below $20,000.
State reporting may still use a $600 threshold
The federal threshold does not override state reporting rules. Some states continue to require reporting at much lower levels, including $600 thresholds.
Examples commonly relevant to international sellers include:
- Maryland
- Massachusetts
- Vermont
- Virginia
- Montana
- North Carolina
- District of Columbia
State requirements can change independently. A seller may therefore receive a Form 1099-K for state reporting even when the federal TPSO threshold is not met.
Example: UK Amazon seller below the federal threshold
Suppose your UK business sells $18,500 through a US marketplace in 240 transactions.
You may not receive a federal Form 1099-K because your gross payments do not exceed $20,000. However:
- The income is still taxable and must be included in your records.
- A state may apply a lower reporting threshold.
- Marketplace and payment statements must still be reconciled to your bookkeeping.
- Refunds, returns, fees and sales tax collections must be separated from gross revenue.
No Form 1099-K does not mean no reporting obligation. You must report all business income, whether or not a form is issued.
2. The 1% remittance transfer tax now applies to certain physical transfers
The IRS issued proposed regulations on 10 April 2026 under IR-2026-48.
The new tax applies from 1 January 2026 to certain remittances sent from the US to a foreign country.
The key point is the payment method. The tax applies when the sender provides a physical instrument such as:
- Cash
- A money order
- A cashier’s check
- A traveller’s check
- A similar physical instrument
The sender is legally liable for the tax. Remittance transfer providers must generally collect it, make semimonthly deposits and report it quarterly on Form 720.
The first semimonthly deposits were due on 29 January 2026. Notice 2025-55 provides limited relief from failure-to-deposit penalties for providers during the first three quarters of 2026.
Routine electronic transfers may be treated differently
Do not assume that every transfer from a US business bank account is subject to the 1% tax.
The proposed rules focus on covered remittance transfers where the sender provides cash or a similar physical instrument to the provider. The treatment of bank transfers, cards and checks can differ, so you should retain the payment method and provider records for every cross-border transfer.
Example: repatriating profits from a US entity
A US LLC owned by a UK company sends $50,000 to the UK through a remittance provider. If the sender uses a cashier’s check or cash, the potential tax is:
- $50,000 × 1% = $500
The sender remains liable, even though the provider normally collects the amount.
Record the transfer separately from ordinary operating expenses, owner distributions and intercompany payments. This will help you determine whether the transfer falls within the final rules and support your reporting position.
3. Form 5472 enforcement remains a major risk for foreign-owned US LLCs
A foreign-owned US disregarded entity can be treated as a reporting corporation for Form 5472 purposes.
Generally, the entity must file Form 5472 with a pro forma Form 1120 when it has reportable transactions with its foreign owner or another related party.
Common reportable activity can include:
- Capital contributions
- Distributions
- Loans and repayments
- Payments to or from a foreign owner
- Related-party service charges
- Inventory or platform arrangements
- Formation, acquisition or dissolution transactions
A business does not avoid the filing requirement simply because it has no US income tax liability.
Understand the Form 5472 penalties
The IRS instructions provide for:
- $25,000 for each failure to file a complete and correct Form 5472 on time.
- An additional $25,000 for each 30-day period, or part of a period, when the failure continues more than 90 days after IRS notification.
- No maximum limit on continuation penalties.
- Separate exposure for different related parties and reporting corporations in applicable circumstances.
The IRS Form 5472 instructions also confirm that a substantially incomplete form can be treated as a failure to file.
An IRS notice should be treated as urgent. Responding quickly can help prevent the continuation penalty from increasing.
Example: foreign-owned Amazon FBA LLC
A UK owner operates a US LLC for Amazon FBA sales. During the year:
- The UK owner contributes $30,000 to fund inventory.
- The US LLC pays a US warehouse.
- The owner withdraws $20,000.
- The LLC pays related-party service fees to the UK company.
These transactions need to be reviewed and classified correctly. The LLC may have Form 5472 obligations even if Amazon collected the sales tax and the LLC paid little or no federal income tax.
4. Keep FTIN and W-8 documentation valid
Foreign owners and companies regularly provide Forms W-8BEN or W-8BEN-E to US payers and withholding agents.
For entities, the foreign tax identifying number (FTIN) is generally entered on Form W-8BEN-E, Part I, line 9b. If an FTIN is required but missing or invalid, the form may not support treaty benefits or the intended w
