TITLE: Three Key IRS Updates for July 2026: What International Sellers and Digital Businesses Must Know
Navigating the American tax landscape as an international seller or a growing digital business can often feel like a balancing act. With the IRS frequently updating its enforcement and relief protocols, staying informed is not just helpful, it is essential for your bottom line.
July 2026 has brought several significant shifts that aim to streamline compliance and offer a safety net for those who maintain a strong filing history.
At Sterlinx Global, we operate as your Global Tax Compliance Suite, ensuring that your data is processed into accurate filings every day. Whether you are managing a UK Limited Company trading in the US or a US-based eCommerce brand, these updates directly impact how you handle your annual and quarterly obligations.
Here are the three critical IRS updates you need to know this month.
Experience Hassle-Free Filing with the New Automatic Exemption from Penalty (AEP)
The IRS has officially launched the Automatic Exemption from Penalty (AEP) program via news release IR-2026-83, issued on July 8, 2026. This is a game-changer for compliant taxpayers. For years, the “First Time Abate” (FTA) policy required taxpayers to manually request relief for minor errors, often leading to long wait times and administrative hurdles.
The AEP program changes the script by making relief automatic. If you have a clean compliance history, specifically, three years of timely filing and payment, the IRS system will now automatically waive penalties for failure-to-file, failure-to-pay, and failure-to-deposit.
Why the AEP Matters for Your Business:
- Automatic Peace of Mind: You no longer need to submit formal requests or wait for manual reviews if you have maintained a solid record.
- Broad Eligibility: This applies to 2025 and 2026 quarterly returns, covering essential forms like the 1040, 1120, and 941.
- Phased Implementation: While the system is live now, full implementation across all eligible tax types is expected by January 1, 2027.
Maintain your compliance history now to ensure you remain eligible for this protection. If you are unsure about your previous filings, our team can help you review your cross-border tax strategy to ensure everything is in order.
Streamline Your Reporting with the New Foreign Filer TCC System
For international sellers without a US Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), filing information returns has historically been a logistical nightmare. The IRS has addressed this by launching a dedicated Foreign Filer Transmitter Control Code (TCC) Registration System.
This new system provides a critical workaround for the stricter IRIS (Information Returns Intake System) access requirements. Foreign entities can now obtain a TCC more efficiently to file forms such as 1042-S and the 1099 series electronically through the IDES platform.
Key Benefits of the Foreign Filer TCC System:
- Eliminates ID.me Roadblocks: Many foreign directors struggled with the ID.me verification process; this new system offers a streamlined path for non-US residents.
- Faster Processing: Electronic filing through a dedicated TCC ensures your data reaches the IRS faster, reducing the risk of late-filing penalties.
- Compliance for Non-US Entities: If you operate a foreign entity with US-sourced income, this system is your primary gateway to maintaining legal standing.
Don’t let technical registration hurdles stall your growth. Ensuring your USA sales tax and information reporting are up to date is vital for maintaining your marketplace accounts.
1099-K Reporting: The $20,000 Threshold is Confirmed for 2026
There has been significant debate over the last few years regarding the 1099-K reporting threshold for third-party settlement organizations (TPSOs) like Amazon, PayPal, and Shopify. The IRS has now confirmed that for the 2026 tax year, the reporting threshold remains at $20,000 and 200 transactions.
This follows the “One Big Beautiful Bill Act,” which retroactively repealed the controversial $600 threshold that was previously proposed.
What This Means for Your Marketplace Sales:
- Consistent Reporting: You will only receive a Form 1099-K from your payment processors if you exceed both the $20,000 and 200-transaction limits.
- Reduced Administrative Load: This higher threshold prevents smaller sellers and start-ups from being overwhelmed by complex information returns for low-volume activity.
- Accuracy is Still Paramount: Even if you do not receive a 1099-K, you are still legally required to report all business income on your tax returns.
Keep your records organized. While the threshold is higher, the IRS uses 1099-K data to cross-reference your gross receipts. Discrepancies can trigger inquiries, which is why accurate, daily bookkeeping is non-negotiable for growing SMEs.
How Sterlinx Global Keeps You Compliant
At Sterlinx Global, we don’t just advise, we deliver. We understand that as a business owner, your focus should be on scaling your brand, not navigating IRS news releases. Our operating model is designed for the modern entrepreneur: you provide the data, and we complete the compliance.
From bookkeeping and tax calculations to the precise filing of VAT, GST, and US Sales Tax, we manage the entire lifecycle of your tax obligations. We specialize in supporting UK, USA, Canadian, and Australian entities with a structured, tech-driven approach that eliminates the stress of deadlines.
Whether you need a full-suite accounting solution or modular support for your US tax updates, we are here to ensure your business remains in the IRS’s “good books,” maximizing your chances of benefiting from programs like the new AEP.
Frequently Asked Questions
What is the IRS AEP program?
The Automatic Exemption from Penalty (AEP) is a new IRS initiative that automatically waives failure-to-file and failure-to-pay penalties for taxpayers with a clean compliance history over the previous three years.
Does the $20,000 1099-K threshold apply to international sellers?
Yes. If you are selling into the US market through a third-party processor and meet the $20,000/200 transaction criteria, you will likely receive a 1099-K. However, your specific tax treaty status may impact how this income is taxed.
How do I get a Foreign Filer TCC?
You can apply through the new IRS Foreign Filer TCC Registration System, designed specifically for non-US residents who do not have an SSN or ITIN but need to file information returns electronically.
Is First Time Abate (FTA) still available?
The IRS is currently transitioning from FTA to the automatic AEP system. AEP will fully replace FTA for most eligible returns with due dates on or after January 1, 2027.
Take Action Today
The US tax landscape is moving toward automation, and your business should too. By partnering with Sterlinx Global, you gain a dedicated compliance team that monitors these changes in real-time.
Contact us today to secure your business’s future in the global market.
