A payment settlement entity is required to file a form 1099-K. In general, a company must meet certain requirements to be considered a TPSO. Unlike the 1099-MISC, the form 1099-K is sent to both individuals and corporations to report payments. Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. In other words, if a payor uses a credit card or TPSO to transfer funds to an independent contractor for a payment typically reported on a 1099-MISC, then the payor is required to report those payments on a 1099-K. Imagine you’re a sneaker seller on eBay earning a good portion of your income on the platform. It is unreasonable to expect every customer who buys shoes from you to file a 1099-MISC or report that payment to the IRS. But it is reasonable for eBay to bear the burden of combining the total amount you have earned on the platform selling shoes and report that to the IRS and to you. There are entities and organizations that may loosely fit the definition of a PSE but do not need to file 1099-Ks according to the IRS. In general, TPSO’s must file 1099-K for all payments made in the U.S. Payments to non-U.S.
Note: ACCORDINGLY, YOU ARE URGED TO CONSULT WITH YOUR OWN TAX ADVISERS REGARDING THE SPECIFIC TAX CONSEQUENCES OF YOUR PAYMENTS PROCESSED BY PAYABLE IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
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