Tax & Accounting Blog

IRS Adds a Box to Report Merchant Control Code (MCC) Numbers on Form 1099-K

1099, 6050W, ONESOURCE, Tax Information Reporting, Trust Tax September 28, 2011

6050w imageThe IRS has published a new version of the 2011 Form 1099-K, Merchant Card and Third Party Network Payments.

What’s New?

The IRS has designated Box 3 of the 1099-K for reporting the Merchant Control Code (MCC) number assigned to the recipient.  The MCC is a code number, which a payment card association assigns to Merchant/Payees that accept its payment cards.

What’s Noteworthy?

First, there are some card organizations that do not use MCC numbers.  Second, MCC numbers are not used by third-party network payers who also have to prepare and file Form 1099-K.  Third, the IRS Electronic Filing Instructions (in Revenue Procedure 2011-40 issued last week) designate the MCC as a required element.  The IRS Instructions for preparation of Form 1099-K was issued seven months ago, when Box 3 was a blank box for 2011 reporting, so it does not advise a course of action for a 1099-K reporting organization that doesn’t use MCC numbers.

We’ll be watching closely for IRS clarification.