How should a merchant acquiring entity report transactions if a payee has receipts classified under more than one Merchant Category Code (MCC)

A merchant acquiring entity has two options for reporting transactions if a payee has receipts classified under more than one Merchant Category Code (MCC):

1. File Separate Forms 1099-K: The merchant acquiring entity can file separate Forms 1099-K, "Payment Card and Third Party Network Transactions," for each MCC. Each form would report the gross reportable transaction amounts attributable to each specific MCC.
2. File a Single Form 1099-K: Alternatively, the merchant acquiring entity can file a single Form 1099-K that reports the gross reportable transaction amounts and uses the MCC that corresponds to the largest portion of the total gross receipts.

Additionally, if the merchant acquiring entity (or its processor) employs an industry classification system other than or in addition to MCCs, it should assign to each payee an MCC that most closely corresponds to the description of the payee's business.

Sources:
Publication 1220 (9/2023)
§ 6050W. Returns relating to payments made in settlement of payment card and third party network transactions
FS-2023-6
FS-2024-3
IRS FAQ
IRS FAQ