If you take credit cards in your business, you will be issued a form 1099-K by your merchant services company. IRC Code Sec. 6050W imposes information reporting requirements on payments made in settlement of payment card and third-party network transactions. The reporting requirement applies to payments made after December 31, 2011. The IRS finalized Form 1099-K, Merchant Card and Third Party Payments, in 2011, revised the rules for certain payment settlement entities making payments outside the U.S., and modified the rules for certain insurance companies. The IRS also delayed backup withholding for payment card transactions.
Certain transactions do not need to be reported, such as a withdrawal of funds at an ATM by a payment card. Form 1099-K is similar to other Forms 1099 used to report interest, dividends and other payments.