There’s a new form to add to the already long list of IRS forms to be aware of: Form 1099-K, Merchant Card and Third Party Network Payments. The form is the result of new compliance reporting requirements for certain credit card and third party network payments such as PayPal. Payments made in settlement of third-party network transactions are required to be reported on the 1099-K if the aggregate number of transactions exceeds 200 and the amount to be reported exceeds $20,000 with respect to that payee within a calendar year.
Certain payments for goods and services paid by credit card or third party merchants will now be reported to the IRS via the form 1099-K. They are very similar to the form 1099-INT used by banks to report interest and the form 1099-DIV used by banks to report dividends.
The 1099-K will be required for “reportable payment transactions.” A reportable payment transaction is a transaction in which a payment card (such as a credit card or gift card) is accepted as payment or any transaction that is settled through a third party payment network like PayPal. Taxpayers who have a credit card merchant account, PayPal, Amazon Seller account or similar account and otherwise meet the criteria will receive form 1099-K from their service provider at the end of the year.
Precisely Right Accounting 