In late July, the IRS issued guidance on I.R.C. Section 6050W reporting requirements in the form of seven pages of frequently asked questions (FAQs). Section 6050W, which went into effect in January of 2011, spawned Form 1099-K reporting for the upcoming tax season.
The FAQs give clear definitions on many of the key terms of Section 6050W, including:
- Payment Settlement Entities
- Third Party Settlement Organizations
- Merchant Acquiring Entities
- Participating Payee
- Payment Cards
In addition to explaining why these new requirements were created, the FAQs also clarify who must file Form 1099-K, what must be reported and when. If you have been confused by much of the previously published material on this topic, you may find these FAQs extremely helpful! Click to view the IRS FAQs.