Form 1099-K, Payment Card and Third Party Network Transactions, is a tax form used in the United States to report payment card and third-party network transactions. It is filed by payment settlement entities (PSEs) for payments made in settlement of reportable payment transactions within a calendar year. A reportable payment transaction includes any payment card transaction or third-party network transaction. The PSE, which can be a domestic or foreign entity such as a merchant acquiring entity (e.g., a bank or other organization with the contractual obligation to make payment to participating payees in settlement of payment card transactions) or a third-party settlement organization (TPSO, the central organization with the contractual obligation to make payments to participating payees of third-party network transactions), submits the instruction to transfer funds to the account of the participating payee to settle these transactions.
A participating payee is any person, including governmental units and their agencies or instrumentalities, who accepts a payment card or any account number or other indicia associated with a payment card as payment, or accepts payment from a TPSO in settlement of a third-party network transaction. The form is used to report transactions made in settlement of payment card transactions and third-party network transactions that occur within the calendar year, and it must be filed for each participating payee for which the PSE has collected reportable payment transactions.
Form 1099-K is filed electronically with the IRS and is part of the Combined Federal/State Filing (CF/SF) Program. It is one of the information returns that can be filed electronically through the FIRE System. The form is filed on a calendar year basis, and for each calendar year, it must be filed by February 28 (or March 31 if filing electronically) of the year following the calendar year in which the reportable payment transactions occurred. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.
The form plays a crucial role in facilitating tax compliance for both the PSEs and the individual payees by ensuring that payment card and third-party network transactions are reported to the IRS. This reporting is essential for the IRS to monitor and ensure that all applicable taxes on these transactions are correctly calculated and paid.
Sources:
Instructions for Form 1099-K (01/2022)
Publication 519 (2023)
General Instructions for Certain Information Returns (2023)
Instructions for Form W-8BEN-E (10/2021)
Instructions for Forms 1099-MISC and 1099-NEC (01/2024)
Publication 1220 (9/2023)
Instructions for Form 990-T (2023)
