Form 1099-K

Form 1099-K

A form that one files with the IRS to report the settlement of a debt on a gift card, credit card, or similar instrument by a third party.
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Taxpayers that sell products or services online or accept payment cards for sales, as well as their advisers, need to be aware of IRS notice letters relating to Form 1099-K, Payment Card and Third Party Network Transactions, so they may quickly respond to the IRS when necessary.
PSEs must file Form 1099-K with the IRS and participating payees.
Form 1099-K reports amounts that should be included in top-line business revenues and is simply another example of information reporting the IRS uses to reduce the tax gap (the amount of tax owed but not paid).
Unlike with other Forms 1099, the IRS may be unable to verify a Form 1099-K amount based on a taxpayer's income tax return without first requesting additional information from the taxpayer.
According to the IRS, Form 1099-K reports the annual gross dollar amount of transactions a PSE settled for a participating merchant during the prior calendar year, on a month-by-month basis, and the merchant's legal name and taxpayer identification number (TIN) (see "General FAQs on Payment Card and Third Party Network Transactions," available at tinyurl.
6050W(c) and (e), PSEs must report on Form 1099-K (1) all payments made in settlement of payment card transactions (e.
In November 2012, the IRS began issuing notices about potential discrepancies in the reporting of gross receipts based on the reported Form 1099-K information.
Information required by the letters and Form 14420 primarily serves to verify Form 1099-K details and explain why receipts other than those from PSE payments seem to account for a lower portion of total reported gross receipts than expected for the type of business involved.
The bank or credit card company that made the actual payment will send the contractor Form 1099-K.
Form 1099-K, Merchant Third Party Network Payments, will serve to report businesses total gross aggregate reportable paym transactions for the 2011 tax calendar.