New for 2012 is a law requiring third party network transactions be reported on a 1099-K. What is a third party network transaction? According to the IRS they are a bank or other organization that has the contractual obligation to pay the participating merchant in settlement of payment card transactions….huh? Think PayPal.
Anyway, these companies in 2012 will have to send out 1099-K forms reporting the name, address, TIN, amount received, plus a monthly breakdown of dollar amounts. So all the little people selling on E-Bay will receive a 1099-K from PayPal for their total sales that PayPal collected and remitted to them. The IRS will then match up the 1099-K information with the individuals tax returns and make sure that the income received is reported. Here is a sneak peek of what the form will look like http://www.irs.gov/pub/irs-pdf/f1099k.pdf.
All I can say is I’m glad I’m not a third party network transaction company charged with keeping track of this information!