Form 1099-K Checklist—2014 Tax Year
Purpose
Form 1099-K reports gross payment card and third-party network transactions exceeding the $20,000 and 200-transaction reporting threshold for calendar year 2014. Payment Settlement Entities must report all transactions at settlement, not authorization. The 2014 instructions provide expanded guidance on Electronic Payment Facilitator disclosure requirements and merchant category code reporting.
Filing Requirements
Who Must File
Payment Settlement Entities, including merchant acquiring entities and third-party settlement organizations, must file Form 1099-K for each participating payee when reportable payment transactions meet the minimum thresholds. Electronic Payment Facilitators that contract with PSEs to make settlement payments must file Form 1099-K instead of the PSE unless the parties agree in writing that the PSE will file by designation.
Reporting Thresholds
For third-party network transactions, reporting is required only when both conditions are met: gross payments exceed $20,000 for the calendar year, and the total number of transactions exceeds 200. Payment card transactions have no minimum threshold and must be reported regardless of amount or transaction count. These de minimis thresholds remain unchanged from prior years, with no inflation adjustment applied for 2014.
Important Deadlines
Furnish Copy B to payees by January 31, 2015. File paper Copy A with the IRS by March 2, 2015. File electronic submissions by March 31, 2015. The March 2 deadline for paper filing reflects the extension from February 28, 2015, which fell on a Saturday. Extensions of time to file may be requested using Form 8809 at least 30 days before the due date.
Completion Steps
Step 1: Identify and Mark Filer Classification
Check the appropriate filer classification box to indicate whether you are a Payment Settlement Entity, Electronic Payment Facilitator, or other third-party payer. This identification is mandatory because reporting responsibility differs by entity type under IRC Section 6050W. Enter your complete legal name, street address, city, state, ZIP code, telephone number, and federal identification number in the designated filer section.
Step 2: Verify Filer Information Accuracy
Ensure that your name and address match the IRS records associated with your Employer Identification Number. The telephone number must allow payees to reach a person knowledgeable about the payments reported on the form. If you are an Electronic Payment Facilitator or other third party, enter the Payment Settlement Entity’s name and telephone number in the designated box above the account number field.
Step 3: Obtain Complete Payee Information
Enter the payee’s legal name and complete street address, including apartment or suite number if applicable. The address must be the location where the payee conducts business or resides, not a mail-forwarding service or post office box, unless that is the only available address. Include city, state, and ZIP code for all payees.
Step 4: Report Payee Taxpayer Identification Number
Enter the payee’s complete nine-digit Taxpayer Identification Number, which may be a Social Security Number, Employer Identification Number, Individual Taxpayer Identification Number, or Adoption Taxpayer Identification Number. Although Copy B furnished to the payee displays only the last four digits for privacy protection, you must report the complete TIN to the IRS on Copy A.
Step 5: Complete Box 1a Gross Amount
Enter the gross amount of total reportable payment card or third-party network transactions for calendar year 2014. “Gross amount” means the total dollar amount without regard to adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other deductions. Report the transaction amount as of the settlement date, not the authorization date. The amount in Box 1a must equal the sum of the monthly amounts shown in Boxes 5a through 5l.
Step 6: Complete Box 1b If Applicable
Box 1b for Card Not Present Transactions is optional for 2014 reporting. If you choose to complete this box, enter the gross amount of transactions where the card was not physically present at the time of the transaction or the card number was manually keyed into the terminal. This typically includes online sales, telephone orders, and mail-order transactions.
Step 7: Enter Merchant Category Code
Enter the four-digit merchant category code in Box 2 if your organization or the acquiring bank assigns one. Payment Settlement Entities reporting payment card transactions must provide this code when available from the card network or acquiring entity. If you are a third-party settlement organization or do not use industry classification systems, leave this box blank.
Step 8: Report Number of Payment Transactions
Enter the total number of payment transactions in Box 3. Count only purchase transactions and exclude refund or reversal transactions from this total. This box is required and must be completed for all Forms 1099-K filed for the 2014 tax year.
Step 9: Report Federal Income Tax Withheld
Enter any backup withholding amount in Box 4. Payees who fail to furnish their Taxpayer Identification Number are subject to backup withholding on reportable payments. For third-party settlement organizations, backup withholding applies only when the payee has received payment in more than 200 transactions within the calendar year, regardless of dollar amount. Payment card transactions have no transaction threshold for backup withholding purposes.
Step 10: Complete Monthly Breakdown
Enter the gross transaction amount for each calendar month in Boxes 5a through 5l corresponding to January through December 2014. Monthly amounts must reflect settlement amounts as of the settlement date within each month. The sum of all monthly amounts must equal the total shown in Box 1a. Do not adjust these amounts for refunds, chargebacks, or other adjustments processed after year-end.
Step 11: Mark Transaction Type
Check the first box if you are reporting payment card transactions. Check the second box if you are reporting transactions on a third-party network. If the same payee received both types of payments, you must file separate Forms 1099-K for each transaction type rather than combining them on a single form.
Step 12: Assign Account Number If Applicable
Enter an account number if you maintain multiple accounts for the same payee and are filing more than one Form 1099-K for that payee. The IRS encourages all filers to designate account numbers on all Forms 1099-K to facilitate accurate record matching and reduce processing errors.
Step 13: Complete State Information If Required
Boxes 6 through 8 are provided for filers participating in the Combined Federal/State Filing Program or those required to file paper copies with state tax departments. These boxes are optional for IRS purposes. If completing state information, enter the two-letter state abbreviation in Box 6, the filer’s state identification number in Box 7, and any state income tax withheld in Box 8.
Step 14: Verify Form Accuracy and Legibility
Confirm that all entries are accurate, legible, and properly formatted. Use black ink and 12-point Courier font for typed entries. Do not use dollar signs, ampersands, asterisks, commas, or other special characters in money amount boxes. Leave boxes blank rather than entering zero unless making corrections. Ensure decimal points are included to show dollars and cents in the format 00000.00.
Step 15: Prepare Forms for Submission
Do not cut or separate forms printed two or three to a page. Submit the entire page, even if some forms are blank or marked void. Do not use photocopies of forms. Remove pinfeed strips outside the standard paper size without tearing the form. Send forms to the IRS in flat mailings without folding. Do not staple forms to Form 1096 or to each other.
Key 2014 Requirements
Electronic Payment Facilitator Disclosure
The IRS clarified in 2014 instructions that Electronic Payment Facilitators must disclose their own name and telephone number separately from the Payment Settlement Entity to prevent confusion among payees about settlement account ownership and transaction dispute resolution. This disclosure is mandatory when the payee’s primary contact for transaction issues differs from the entity linked to the transaction's Merchant Category Code Expansion.
Merchant category code reporting in Box 2 expanded in 2014 to include network transaction types from payment platforms such as PayPal and Square alongside traditional payment card networks. Payment Settlement Entities must obtain codes from card networks or third-party settlement organizations where the acquiring bank or network assigns classification codes.
Gross Amount Reporting Requirement
The 2014 instructions introduced explicit language prohibiting Payment Settlement Entities from reporting net settlement amounts after deductions for fees, chargebacks, or refunds issued after year-end. Only gross transaction amounts determined at the time of settlement on or before December 31, 2014, qualify for reporting. All adjustments occurring in subsequent years must be excluded from the 2014 form.
Third-Party Network Identification
The 2014 guidance added clarification requiring third-party network transactions, including those from mobile wallets and peer-to-peer payment platforms, to identify the facilitating network name in the filer classification section. This requirement ensures proper attribution of settlement responsibility and assists payees in reconciling reported amounts with their business records.
Foreign Payee Exceptions
Payment Settlement Entities are not required to file Form 1099-K for certain payments to foreign payees when proper documentation is obtained. For payments to offshore accounts, PSEs may rely on Form W-8BEN, Form W-8ECI, or acceptable documentary evidence establishing non-U.S. status. The documentation must be collected within 90 days of entering the contractual obligation with the participating payee.
Submission Guidelines
Form 1096 Transmittal Requirements
Submit Form 1096 as the transmittal document with each group of Forms 1099-K. Groups are formed by type and submit separate Form 1096 transmittals for payment card transactions and third-party network transactions. The filer's name, address, and identification number on Form 1096 must match the information shown on all accompanying Forms 1099-K.
Electronic Filing Option
Filers required to file 250 or more Forms 1099-K must file electronically unless granted a hardship waiver. Electronic filing requires advance approval obtained by submitting Form 4419 at least 30 days before the due date. Once approved, filers are not required to reapply annually. Electronic submissions must be filed by March 31, 2015, through the IRS Filing Information Returns Electronically system.
Statement Furnishing Requirements
Provide Copy B to each payee by January 31, 2015. Statements may be furnished electronically if the payee consents, as outlined in the Treasury Regulations. Truncate the payee’s identification number to show only the last four digits on Copy B and all other payee copies. The complete nine-digit number appears only on Copy A, which is filed with the IRS.
Corrected Returns
File corrected returns as soon as errors are discovered. Mark the “CORRECTED” box at the top of the form and complete all information fields, including unchanged data. Submit corrected Copy A with a new Form 1096 to the appropriate IRS service center. Furnish corrected statements to affected payees showing the correction. Do not use the VOID box to correct previously filed returns.
Historical Context
Form 1099-K reporting requirements under IRC Section 6050W became effective in the calendar year 2011, with the first forms filed in 2012. The 2014 tax year represents the fourth full calendar year of Form 1099-K reporting. The Housing and Economic Recovery Act of 2008 established these reporting requirements to improve tax compliance through third-party information reporting. The $20,000 and 200-transaction thresholds for third-party network transactions have remained constant since implementation, with no inflation adjustments or temporary exceptions applied through 2014.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
