Tax compliance for payment processing accounts and Form 1099-K

Find out about the IRS (Internal Revenue Service) reporting requirements for payment processing accounts and details on Form 1099-K.

The IRS and some U.S. states require payment providers like Intuit QuickBooks Payments, to report payment card and third-party network transactions.

Form 1099-K is an informational document provided to Intuit QuickBooks Payments customers when an account meets specific criteria. It summarizes the sales activity of your Intuit QuickBooks Payments account and is designed to assist you in reporting your taxes. It will be provided to you, the IRS and some U.S. states.

Intuit QuickBooks Payments will provide a Form 1099-K for each payment account meeting the following criteria in the previous calendar year:

• The account is U.S.-based and the gross amount of reportable card payments for calendar year 2024 is $5,000 or more. Or;
• The account met the state filing thresholds. Filing requirements for some states can differ from the IRS. You can view the full list of state filing thresholds in the table below.

Note: Prior to calendar year 2024, the IRS applied the 1099-K threshold to U.S.-based merchant accounts with $20,000 USD in total gross volume and 200 transactions.

You can download your Form 1099-K from the Merchant Service Center by January 31st. Here's how.

1. Sign in to the Merchant Service Center.
2. From the Activity & Reports ▼ dropdown, select Download Form 1099-K.
3. Select Download.

State filing thresholds

Penalties for non-compliance

The IRS uses the info reported on Form 1099-K to make sure taxpayers accurately report all of their income. Failure to comply with the reporting requirements can result in penalties and fines. If a payment provider fails to file a Form 1099-K, or files an incorrect or incomplete form, they too may be subject to penalties.

The IRS might penalize you under these circumstances:

• If you fail to file in a timely manner
• If you fail to include all required information
• If you include incorrect information

Penalties could also apply if:

• You file on paper when you were required to file electronically
• You report an incorrect TIN
• You fail to report a TIN
• You fail to file paper forms that are machine readable and applicable revenue procedures provide for a machine-readable paper form

Here are the penalties:

• If you correctly file within 30 days: $60 per return, with a maximum penalty of $664,500 per year ($232,500 for small businesses*)
• If you correctly file more than 30 days after the due date: $130 per return, with a maximum penalty of $1,993,500 per year ($664,500 for small businesses*)
• If you file after August 1, or don’t file at all: $310 per return, with a maximum penalty of $3,987,000 per year ($1,329,000 for small businesses*)
  
  *Small businesses - You’re considered a small business if your average annual gross receipts for the three most recent tax years (or however long your business has existed) is $5 million or less.

Similarly, if you fail to report income reported on Form 1099-K, the IRS might subject you to penalties for underreporting income. Penalties for underreporting income can be as much as 20% of the underreported amount, plus interest.

If you need to find out what Legal Business Name or TIN the IRS has on file, look at your SS4 EIN Assignment Letter. If you can't find it, check your last business tax return or call the IRS at (800) 829-4933 and ask for a letter 147c.

If you need to verify or update the taxpayer info on your QuickBooks Payments account, visit the Merchant Service Center.

See Update business and account info for QuickBooks Payments for detailed steps.

For more info on how these regulations may affect your business, visit the IRS website or consult your tax or legal advisor.