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Tax compliance for payment processing accounts and Form 1099-K

by Intuit Updated 2 months ago

Find out about IRS report requirements for payment processing accounts and details on Form 1099-K.

Form 1099-K is an IRS informational form for you, the IRS, and some states. Intuit QuickBooks Payments will submit Forms 1099-K to all states that require 1099-K filing.

The IRS requires payment settlement entities (PSEs) like Intuit QuickBooks Payments, to report payment card and third-party network transactions. Form 1099-K shows how much money you got paid during the year. It's broken down by month to help you report your taxes.

For tax year 2023, if you receive payments that total more than $20,000 and have more than 200 transactions, the IRS requires a Form 1099-K. Your Form 1099-K is available to download from the Merchant Service Center as of January 31, 2024.

Filing requirements for some states can differ from the IRS and have lower reporting thresholds. If your state isn't listed, this doesn't apply to you. 

StateFiling due dateFiling threshold
AlabamaJan 2024Same as IRS
ArkansasJan 2024$2,500.00
CaliforniaMar 2024Same as IRS
ConnecticutJan 2024Same as IRS
District of ColumbiaJan 2024$600.00
FloridaMar 2024Same as IRS
GeorgiaJan 2024Same as IRS
HawaiiFeb 2024Same as IRS
IllinoisMar 2024$1,000 and 4 transactions
KansasJan 2024Same as IRS
MaineJan 2024Same as IRS
MarylandJan 2024$600.00
MassachusettsJan 2024$600.00
MontanaJan 2024$600.00
New JerseyJan 2024$1,000.00
New YorkMar 2024Same as IRS
North CarolinaJan 2024Same as IRS
OregonJan 2024Same as IRS
TennesseeMar 2024Same as IRS
VermontJan 2024$600.00
VirginiaJan 2024$600.00

Penalties for non-compliance

The IRS checks the info on Form 1099-K to make sure people report their income correctly. If you don't follow the IRS rules, you could get penalties and fines. Payment settlement entities (PSEs) can be fined or penalized if they don't file Form 1099-K or file it incorrectly.

The IRS can penalize you if you fail to file a correct information return by the due date and you can't show reasonable cause. The penalty applies:

  • If you don't file on time.
  • If you don't include all the info required on a return.
  • If you have incorrect info on a return.

Penalties can also apply if:

  • You file on paper when you're required to file electronically.
  • You report the wrong TIN. You might be subject to backup withholding.
  • You don't report a TIN. You might be subject to backup withholding.
  • You don't file paper forms. Revenue procedures allow for a machine-readable paper form.

The penalty for non-compliance is based on when you file the correct info return.

Here are the penalties:

  • If you file your taxes correctly within 30 days, you'll pay a $60 fee for each form you file. The most you'll pay in a year is $630,500 ($220,500 for small businesses*).
  • If you file your taxes more than 30 days after the due date, but on or before August 1st, you'll have to pay a $120 penalty. The maximum penalty you can pay in a year is $1,891,500 ($630,500 for small businesses*).
  • If you file your taxes after August 1 or don't file at all, you may have to pay a penalty. The penalty is $310 for each return you file late. The maximum penalty you can pay in a year is $3,783,000 ($1,261,000 for small businesses*).

*Small businesses - You're a small business if your average annual income for the past 3 tax years is $5 million or less.

If you need to find out what the IRS has on file for your business name or your TIN, 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 change your business or taxpayer info on your QuickBooks Payments account, go to Merchant Service Center.

For more info on how these regulations may affect your business, check out http://www.irs.gov or ask your tax or legal advisor.

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