New 1099-K Reporting Requirements for Payment Settlement Entities
Beginning in January, 2012, payment settlement entities (PSEs) are required by the Housing Assistance Tax Act of 2008 to report on Form 1099-K the following transactions:
- All payments made in settlement of payment card transactions (e.g., credit card);
- Payments in settlement of third party network transactions IF:
-Gross payments to a participating payee exceed $20,000; AND
-There are more than 200 transactions with the participating payee.
Filing Deadlines & Procedures
Your 1099-Ks are due to merchants by January 31, 2012. Electronically filed 1099-Ks are due to the IRS April 2, 2012 (normally March 31), while paper 1099-Ks are due February 28, 2012.
File your 1099-K electronically after January 4, 2012 through the FIRE (Filing Information Returns Electronically) option. Existing users may log in. New users may create an account and test their file before submitting. For more information, review the page numbered 20 (bottom, right) of Publication 1220 (PDF). If you are considering filing on paper, review General Instructions for Certain Information Returns.
Verification Processes
We verify that tax returns are correct and complete using the following processes:
- TIN Matching Program
Use the IRS Taxpayer Identification Number (TIN) Matching Program to ensure the Forms 1099-K you submit have the correct TIN. The program permits you to verify the TIN furnished by the taxpayer before you file the Forms 1099-K.
- Name Control
The name control (a sequence of characters derived from a taxpayer's name) and TIN on an electronically filed return must match our records. Refer to Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs for more.
More Information
We also are offering transitional relief for 2012 1099-K filings provided that the filer makes a good faith effort to file accurately. For payments made after December 31, 2012, we will require backup withholding on payments to payees who failed to provide an accurate TIN.
You can find more about the 1099-K and other information returns at our Third Party Reporting Information Center.
Trades or businesses should continue to report payments made to independent contractors on Form 1099-MISC as they have done in the past. No Form 1099-K should be issued.
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