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New Reporting Requirements and Compliance Deadlines for Multinational Businesses Under the One Big Beautiful Bill
The One Big Beautiful Bill Act (OBBBA) introduces several significant changes to reporting requirements and compliance deadlines that directly impact multinational businesses operating in the United States. These modifications represent a comprehensive restructuring of international tax compliance obligations, with enhanced enforcement mechanisms and new penalty structures that require immediate attention from multinational enterprises.
Enhanced Information Reporting Thresholds
The OBBBA substantially increases information reporting thresholds by amending Section 6041(a) to strike “$600” and insert “$2,000”, with these amendments applying to payments made after December 31, 2025. 1 1 This change affects multinational businesses by reducing the administrative burden associated with issuing Forms 1099-NEC and 1099-MISC for business payments to vendors and contractors.
The legislation includes an inflation adjustment mechanism, where the dollar amount in subsection (a) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, with any increase rounded to the nearest multiple of $100. 1 This indexing ensures that the reporting threshold maintains its real value over time, providing long-term certainty for multinational businesses in their compliance planning.
The changes also extend to remuneration for services reporting under Section 6041A(a)(2) and backup withholding provisions under Section 3406(b)(6), creating consistency across related information reporting requirements. 1 Multinational businesses must update their payroll and accounts payable systems to accommodate these new thresholds beginning with the 2026 tax year.
Third-Party Network Transaction Reporting Modifications
The OBBBA reinstates the exception for de minimis payments by third party settlement organizations, requiring reporting only if the amount exceeds $20,000 and the aggregate number of transactions exceeds 200. 2 This represents a significant rollback from the previously enacted $600 threshold that was never implemented, providing relief for multinational businesses engaged in digital commerce and payment processing.
The legislation establishes specific backup withholding rules for third party network transactions, treating payments as reportable only if both the transaction count and dollar amount thresholds are exceeded, with an exception for payees who had reportable transactions in the preceding calendar year. 2 These provisions apply to calendar years beginning after December 31, 2024. 2
International Tax Compliance and Reporting Obligations
The OBBBA maintains existing international information reporting requirements while introducing modifications that affect multinational businesses. Every United States person must furnish information with respect to any foreign business entity which such person controls, including the name, principal place of business, nature of business, country of incorporation, balance sheet information, and transaction details. 3
Section 6038(a)(1) imposes information reporting requirements on any U.S. person who controls a foreign corporation, with Form 5471 and accompanying schedules used to satisfy these requirements, which must be filed with the U.S. person’s timely filed Federal income tax return. 4 4 The OBBBA does not modify these fundamental reporting obligations but enhances the penalty framework for non-compliance.
Additionally, information reporting requirements are imposed on any U.S. person treated as a U.S. shareholder of a controlled foreign corporation (CFC) for an uninterrupted period of 30 days during its annual accounting period who owned stock in the CFC on the last day of the CFC’s annual accounting period. 4 4
Country-by-Country Reporting Requirements
An ultimate parent entity of a U.S. multinational enterprise (MNE) group is not required to report information under country-by-country reporting rules if the annual revenue of the U.S. MNE group for the immediately preceding reporting period was less than $850,000,000. 5 The rules apply to reporting periods of ultimate parent entities of U.S. MNE groups that begin on or after the first day of a taxable year of the ultimate parent entity that begins on or after June 30, 2016. 5
U.S. MNE groups will be subject to country-by-country filing obligations in other countries in which they do business if the United States does not implement such reporting, meaning that failure to adopt these requirements in the United States may increase compliance costs because U.S. MNE groups may be subject to filing obligations in multiple foreign tax jurisdictions. 5
New Compliance Deadlines and Transition Rules
The Secretary of the Treasury must publish a list of occupations which customarily and regularly received tips on or before December 31, 2024, not later than 90 days after the date of enactment of the Act. 6 This requirement affects multinational businesses with U.S. operations in service industries where tipping is customary.
For cash tips required to be reported for periods before January 1, 2026, persons required to file returns or statements under various information reporting sections may approximate a separate accounting of amounts designated as cash tips by any reasonable method specified by the Secretary. 6 This transition rule provides flexibility for multinational businesses to adapt their payroll systems to the new tip reporting requirements.
Written statements for applicable passenger vehicle loan interest must be furnished on or before January 31 of the year following the calendar year for which the return was required to be made. 7 This creates a new annual reporting obligation for multinational businesses that provide vehicle financing benefits to employees.
Enhanced Penalty Framework and Enforcement
Failure to comply with specified information reporting requirements subjects persons to a penalty of $50 for each failure, with the total amount imposed not exceeding $100,000 during any calendar year. 8 While this penalty structure predates the OBBBA, the legislation enhances enforcement mechanisms and expands the scope of reportable transactions.
Identifying a transaction as a listed transaction imposes new duties in the form of reporting obligations and recordkeeping requirements on both taxpayers and their advisors, exposing these individuals to additional reporting obligations and penalties to which they would not otherwise be exposed. 9 Multinational businesses must monitor IRS notices and guidance to ensure compliance with evolving reportable transaction requirements.
Beneficial Ownership Information Reporting Changes
FinCEN has issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act, exempting entities previously known as “domestic reporting companies” from BOI reporting requirements, meaning all entities created in the United States and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. 10 10
Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption must report their BOI to FinCEN under new deadlines, though they will not be required to report any U.S. persons as beneficial owners, with reporting companies registered to do business in the United States before the date of publication of the interim final rule required to file BOI reports no later than 30 days from that date. 10
Administrative Guidance and Implementation Requirements
Following the enactment of the OBBBA, the Internal Revenue Service (IRS) is tasked with providing detailed guidance on the implementation of new deductions and reporting requirements, including specific instructions for taxpayers claiming new deductions and guidance for employers and other payors regarding new information reporting obligations, with the IRS required to publish a list of occupations that “customarily and regularly” received tips by October 2, 2025.
The provision for certain structures will require clear guidance from the IRS and Treasury Department on qualifying structures to ensure the benefit is targeted consistent with the intent of the law. 11 Multinational businesses with U.S. manufacturing operations must monitor forthcoming guidance to determine eligibility for enhanced depreciation benefits.
Impact on Existing Reporting Systems
Exempting overtime introduces an entirely new distinction in the tax code, requiring additional information reporting of hours, likely from employers and employees, as well as new administrative checks. 11 Multinational businesses with U.S. employees must prepare to implement new payroll reporting systems to track overtime hours and premium payments for tax purposes.
The reporting thresholds have increased from $600 to $2,000 for payments made on or after January 1, 2026, for 1099-NEC and 1099-MISC filing requirements, while 1099-K filing requirements have increased to $20,000 or 200 transactions beginning January 1, 2026. These changes require multinational businesses to update their vendor management and payment processing systems to accommodate the new thresholds.
Long-Term Compliance Planning Considerations
The OBBBA makes many permanent changes to international tax policy, notably by canceling the larger scheduled tax increases built into the tax code in 2026 and keeping the effective tax rates on international income closer to current policy values. 11 This permanence provides multinational businesses with greater certainty for long-term compliance planning and system investments.
Navigating the new regulatory environment requires continuous attention to ensure accurate compliance and to optimize tax planning strategies for clients as new rules and clarifications are released. Multinational businesses must establish robust monitoring systems to track evolving guidance and ensure ongoing compliance with the enhanced reporting framework established by the OBBBA.
The comprehensive nature of these changes requires multinational businesses to conduct thorough reviews of their existing compliance procedures, update information systems, and establish new processes to meet the enhanced reporting requirements and modified deadlines established under the One Big Beautiful Bill Act. The combination of increased thresholds for some reporting requirements and enhanced enforcement mechanisms for others creates a complex compliance landscape that demands careful attention and proactive planning.
Sources
1 One Big Beautiful Bill Act Sec. 70433. Increase in threshold for requiring information reporting with respect to certain payees
2 One Big Beautiful Bill Act Sec. 70432. Repeal of revision to de minimis rules for third party network transactions
3 IRC § 6038(a)
4 Dawson U.S. Tax Court Opinions Edward S. Flume
5 T.D. 9773
6 One Big Beautiful Bill Act Sec. 70201. No tax on tips
7 One Big Beautiful Bill Act Sec. 70203. No tax on car loan interest
8 IRC § 6723
9 Dawson U.S. Tax Court Opinions Big Hill Partners, LLC, Bobby A. Branch, Tax Matters Partner
10 FinCEN
11 Tax Foundation
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