The U.S. House of Representatives has passed a sweeping tax reform bill, dubbed the “One Big Beautiful Bill”, which is now awaiting Senate approval. Although the bill is still subject to change, it contains several proposals that could have far-reaching implications for global organisations involved in information reporting and tax withholding.
Comply Exchange, an innovative tax compliance software, recently delved into what the proposed tax bill could mean for information reporting and withholding.
Among the proposed changes are adjustments to reporting thresholds that could reduce burdens on smaller firms and ease administrative pressures. Notably, the threshold for reporting nonemployee compensation on Form 1099-NEC/MISC would increase from $600 to $2,000. Similarly, for third-party settlement organisations such as PayPal and Venmo, the 1099-K reporting threshold would return to its previous level of $20,000 and 200 transactions. This would undo the more stringent $600 threshold introduced in 2022.
The bill also proposes a provision affecting international tax policy. A new framework would impose increased withholding rates on U.S.-source income paid to entities in jurisdictions deemed to have “unfair or discriminatory tax rules” against U.S. businesses. The withholding rate would start at 5% and could escalate to as much as 20% over time—on top of existing statutory rates. This move could complicate compliance workflows, particularly around documentation and rate application for payees in those jurisdictions.
While the proposed changes are not yet law, they signal a potential shift toward stricter international compliance expectations, Comply Exchange explained. For businesses managing tax forms, withholding calculations, and year-end reporting, the need for automated, flexible systems is becoming more urgent.
In response to these anticipated changes, Comply Exchange is taking proactive steps to ensure clients remain compliant. The company is updating its withholding logic and documentation rules, with a focus on preparing for country-specific rate adjustments. It is also exploring enhancements to its monitoring capabilities that would help identify jurisdictions flagged under the new legislation.
Furthermore, new features are being considered to help clients automatically identify and manage impacted payees, reducing the need for manual intervention and increasing agility in regulatory response.
Comply Exchange is positioning itself to help clients manage uncertainty with confidence. As the bill progresses through the legislative process, the company remains committed to providing timely updates and ongoing support.
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