Form 1099-k is needed to be reported by the merchant card companies and third-party networks and they are normally called as Payment Settlement Entities or PSEs. This primarily concerns retailers who use online means for transactions as well as affects businesses that have the substantial credit card, debit card or other financial transactions conducted by a third-party payment processor.
The receivers of this form 1099-K are those who have accepted payments through payment cards like credit cards, debit cards, gift cards, prepaid telephone cards including Etsy cards and a variety of other cards for which the minimum gratification is fixed up by IRS. The reporting of IRS form 1099-K is only required when gross payments to an individual payee exceed $20,000 for the year and when there are more than 200 transactions with the participating payee.
When this criterion is not met as per the instructions of IRS say gross payments to an individual payee are below $20,000 and where they’re less than 200 transactions through different cards then the normal condition of IRS instructions through the 1099-MISC need to be followed as per the response of IRS as follows-
A third party settlement organization is required to report any information concerning third party network transactions of any participating payee only if, for the calendar year: The gross amount of total reportable payment transactions exceeds $20,000, and the total number of such transactions exceeds 200.
If a business makes payments via a third party settlement organization as well as cash or checks to the same independent contractor, the TPSO (Third party Settlement Organization) will be required to report the number of reportable transactions that exceed the de minimis (the minimum requirements) thresholds on Form 1099-K. The amounts paid by cash or check would be reported by the business on Form 1099-MISC if the amounts are $600 or more in a calendar year. The regulations state that reportable payments made under Section 6050W are not reportable under Section 6041. If reportable payments under Section 6050W do not meet the de minimis thresholds in a calendar year, no reporting is required.
IRS is aware of a potential for IRS Form 1099 MISC and 1099-K double reporting, and are constantly monitoring their case selection criteria to address this. IRS expects to provide more guidance, but IRS also does not expect this issue to lead to an increase in examinations.