Compliance
Staying Compliant with One, Big, Beautiful Bill: Understanding 1099-K Changes & ERC Limitations
With recent IRS FAQs and fact sheets, key changes to Form 1099-K thresholds and Employee Retention Credit refunds are clarified—know what to report and when you’ll miss eligibility.
By NomadicTax Research Team • 5-8 min read • November 19, 2025
## 1099-K Thresholds: What’s Changed & Why It Matters
Under the One, Big, Beautiful Bill, the threshold for third-party settlement organizations to report payments via **Form 1099-K** has reverted to *$20,000* gross and *200 transactions*. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
This is a rollback from recent years with much lower thresholds. For people receiving payments from marketplaces, this means many fewer filings for smaller sellers.
## Employee Retention Credit (ERC) Limitations for Late Claims
The IRS released **Fact Sheet 2025-07** clarifying that ERC claims for Q3-Q4 of 2021 filed after **January 31, 2024** may now be limited or disallowed under OBBB provisions. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
If you claimed the ERC late for those quarters, double-check your documentation; you may need to respond or appeal. Employers must ensure they fit the exception criteria and apportioned timelines.
## Best Practices for Compliance
- Review any payments received via third-party platforms (e-commerce, ride-sharing, gig-work). If you had fewer than 200 transactions and under $20,000 gross in 2025, you might not receive a 1099-K—still prepare your own tally.
- For ERC: Gather all documentation of wages, payroll taxes and dates. If you filed after Jan. 31, 2024 for Q3 or Q4, assess whether you're still eligible or if forms need correction.
- Use IRS calculators/tools and check FAQ updates: Fact Sheet 2025-08 for 1099-K; Fact Sheet 2025-07 for ERC. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Real-World Example
Jane Doe sold handmade crafts on an online marketplace in 2025: 180 transactions, $15,000 in gross sales. Under new rules, no 1099-K is required, and Jane reports her income via Schedule C as usual without that form.
Meanwhile, ACME Corp. claimed an ERC refund for Q4 2021 filed in mid-2024. Under OBBB, ACME’s claim is now limited—unless they filed timely or fit the narrow exceptions in the law.
## Penalty Exposure & How to Avoid It
Failing to report when you should can lead to underpayment penalties, but the IRS has designed many of the OBBB provisions with **transition relief** for 2025—such as for car loan interest reporting and initial reporting requirements for tips and overtime. ([eitc.irs.gov](https://www.eitc.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
Still, for 1099-K and ERC, no broad relief—these rules are in effect as written, so compliance matters.
## Compliance Checklist
- Confirm if you meet the threshold for 1099-K in 2025 ($20,000 and 200 transactions).
- Review whether your ERC claims (especially filed after Jan. 31, 2024) for Q3-Q4 2021 will be accepted or limited.
- Use the updated fact sheets from IRS.org to guide your actions.
- Keep accurate records of payments & transactions, even if you think they fall under thresholds—better safe than penalized.
**Bottom line**: The OBBB brings helpful reforms, but also tighter rules in some areas. By staying proactive and aligned with the latest IRS guidance, you can avoid surprises come filing season.