Every January, our customers will receive 1099Ks from our payment processors. Here is a link that describes what a 1099K is, and who gets one:

https://www.irs.gov/Businesses/Understanding-Your-1099-K.

The reason our customers receive these is because they, in the prior calendar year, received payments:

  • from payment card transactions (e.g., debit, credit or stored-value cards), and/or
  • in settlement of third-party payment network (ACH/eCheck) transactions above the minimum reporting thresholds of –
  • gross payments that exceed $20,000, AND
  • more than 200 such transactions

Our processor collects the amounts for the 1099K from the two different types of payments they process - Payment Cards (e.g. Credit Cards) and Third Party Network (e.g. eCheck/ACH). 

Our customers will receive two separate 1099Ks from our processor if they processed both types of payments (e.g. they will send you one with the Payment Card box checked, and one with the Third Party Network box checked).

If the total payments are below the threshold mentioned above, our processor still sends the customer a 1099K, but it's marked NON-REPORTABLE on the processor's side, and therefore they do not send it to the IRS.

One quick thing to note: Some customers might be confused by the totals in the boxes on the 1099. This usually is because of the fact that the IRS requires processors to report “gross” income on the 1099K form, which doesn’t include returns, refunds, chargebacks, etc… here is a link to FAQs regarding these topics: http://www.irs.gov/uac/General-FAQs-on-New-Payment-Card-Reporting-Requirements

Here is a specific FAQ that may help, from their website:

Do payment settlement entities adjust the "gross amount" to account for fees, refunds, charge-backs or other costs and refunded amounts?

No. The "gross amount" is the total unadjusted dollar amount of the payment transactions for a participating payee. This amount is not to be adjusted to account for any fees, refunds, or any other amounts.

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