Tax & Accounting Blog

IRS Releases New FAQs to Help Payers Understand the New Tax Reporting of Form 1099-K (I.R.C. Section 6050W)

1099, 6050W, Information Reporting for Wealth Management, ONESOURCE, Tax Information Reporting, Trust Tax, Withholding Management November 21, 2011

The IRS has revised and updated the Frequently Asked Questions (FAQs) posted on the IRS website for payers who need to know about Form 1099-K reporting.  The updated FAQs are at,,id=249029,00.html. They cover developments as recent as the postponement of the start of backup withholding on Form 1099-K payables (to the beginning of 2013 instead of 2012), and the offer of tax penalty relief for payers who have errors in their Form 1099-K filings for 2011 (if the payer shows that a good-faith attempt to file accurately was made).

The FAQs also cover the new IRS decision that third-party payment settlement organizations do not report Merchant Category Code (MCC) numbers on the 1099-Ks they file. Third-party settlement organizations are to leave box 2 (the MCC box) on the 1099-K blank. The other type of 1099-K filer, the merchant acquiring entity, is expected to enter a MCC in box 2. If the filer has more than one MCC for a payee, the filer has the option of either using the MCC number that applied to the largest portion of the total gross proceeds for the payee or filing multiple 1099-Ks for that payee (one 1099-K for each MCC).

The final version of Form 1099-K has still not been published by the IRS. A 1099-K and Instructions were released by the IRS but were then withdrawn in September and October as the IRS was still hammering out the details.