TabaPay 1099k Procedures

IRS References:

TabaPay Procedures:

  1. Responsibilities.
    1. TabaPay accounting is responsible for generating merchant 1099k as required by IRS and state regulations.
    2. TabaPay provides monthly reporting by merchant to the acquiring bank and merchant.
  2. TabaPay generates 1099k on behalf of the acquiring bank for all merchants that meet the following criteria:
    1. $600 in gross payments during the prior calendar year made to an taxID number (May be across multiple MIDs and merchant accounts), and;
    2. More than 200 card transactions during the prior calendar year, and;
    3. The merchant is a US merchant (merchant bank account receiving payments is in the USA). If the merchant is not a US merchant then TabaPay must collect a W-8 from the merchant within 90 days of signing the merchant agreement, and;
    4. All of the above are ‘PULL’ payments. ‘PUSH’ payments do not get aggregated in the above totals.
    5. We generate the 1099K at the settlement level, so for an ISO if we settle all purchases to one account in their tax ID. This means we will generate one 1099k. If we settle to each individual merchants account with their own tax ID we will generate 1099Ks for each one.
    6. NOTE: if payments are made to an account outside the USA but the entity is a US entity then a 1099k must be issued if the above criteria are met.
  3. Dates and forms.
    1. The statements must be furnished to the payee by January 31 of the year following the transactions.
    2. Form 1099-K is due to the Internal Revenue Service by February 28 for paper filing and March 31 for electronic filing.
    3. The form can be find:
  4. Withholding.
    1. TabaPay has an obligation to withhold 28% of proceeds for merchants that have an incorrect TIN or tax filing name. California requires an additional 7%. Refunds of the withholding can only be made by the IRS.
    2. TabaPay merchant boarding policy requires verification of TIN/name to avoid withholding. NOTE: TabaPay does not board small merchants, rather fewer large merchants.
  5. TabaPay generates a 1099k for each merchant, on behalf of the acquiring bank, meeting the given criteria with the following details:
    1. Filer/PSE information:
      1. Filer’s name: TabaPay’s information
      2. Payment Settlement Entity (PSE) box is checked.
      3. Transactions reported: Payment card
      4. PSE’s name: TabaPay’s information.
      5. Filer’s TIN: TabaPay TIN.
    2. Merchant information:
      1. Payee information: the merchant information
      2. Payee’s TIN: Merchant TIN
      3. Gross Amount: Purchase proceeds less chargebacks and refunds.
      4. MCC used
      5. Number of payment transactions: total purchase #
      6. Federal income tax withheld: none. TabaPay does not withhold income tax.
      7. Account number: the merchant’s account number (Client ID/MID) on the TabaPay system (may be more than one).
      8. Box 5: monthly purchases less chargebacks and refunds
      9. Box 6: merchant’s state listed on the merchant application
      10. Box 7: State ID number: the state ID number of the merchant.
      11. Box 8: State income tax withheld. None. TabaPay does not withhold state income tax.
        NOTE: Massachusetts and Vermont require 1099k for any merchant in this state that receives more than $600 in purchase proceeds. TabaPay will generate 1099k for merchants in these states only. New York, California, and Hawaii require that TabaPay provide the 1099k to the state.
  6. ISOs
    1. The ISO is responsible for delivering the 1099k to each merchant.
    2. The ISO is responsible for accuracy of merchant TIN and filing name.
    3. The ISO is responsible for any withholding.
    4. If TabaPay sends the instructions to the acquiring bank to transfer funds to a particular merchant’s bank account then TabaPay generates the 1099k and files with the IRS and state as the PSE; otherwise if the ISO sends the instructions to settle merchant purchase proceeds then the ISO is the PSE with responsibility to file the 1099k with each state.
    5. TabaPay supplies the ISO with the necessary payment data for the ISO to generate the 1099ks.