1099NEC and 1099K - what I heard at update seminar

[BulldogTom]

I am having a hard time with this one.   Speaker at the seminar says that if you pay a contractor or vendor with a credit card or other electronic payment system, you don't have to provide a 1099NEC or 1099MISC since they will be getting a 1099K from the payment processor.

My issue is, can you really transfer your liability to report the transaction to the payment processor?   It seems too good to be true.   What happens if the IRS audits?   

Tom
Longview, TX

[RitaB]

6 minutes ago, BulldogTom said:

I am having a hard time with this one.   Speaker at the seminar says that if you pay a contractor or vendor with a credit card or other electronic payment system, you don't have to provide a 1099NEC or 1099MISC since they will be getting a 1099K from the payment processor.

My issue is, can you really transfer your liability to report the transaction to the payment processor?   It seems too good to be true.   What happens if the IRS audits?   

Tom
Longview, TX

Well, I heard that, too, and started looking to confirm your suspicions that presenter is wrong.  Um.  No, looks like the reporting is only on the 1099-K by the payment processor:   Instructions for Forms 1099-MISC and 1099-NEC (Rev. January 2022) (irs.gov) 

[Lee B]

13 minutes ago, BulldogTom said:

I am having a hard time with this one.   Speaker at the seminar says that if you pay a contractor or vendor with a credit card or other electronic payment system, you don't have to provide a 1099NEC or 1099MISC since they will be getting a 1099K from the payment processor.

My issue is, can you really transfer your liability to report the transaction to the payment processor?   It seems too good to be true.   What happens if the IRS audits?   

Tom
Longview, TX

I agree, the speaker at your seminar doesn't have both oars in the water.

If you don't mind sharing, who was sponsoring the seminar and who was the speaker, so that I can avoid them!

[BulldogTom]

45 minutes ago, cbslee said:

I agree, the speaker at your seminar doesn't have both oars in the water.

If you don't mind sharing, who was sponsoring the seminar and who was the speaker, so that I can avoid them!

NATP.   Speaker Jaye Tritz.  Rita is correct.  From the 1099 instructions.

Form 1099-K. Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K.

Tom
Longview, TX

[grandmabee]

I thought it was that way for several years since the 1099-k's came into play.  Otherwise it would be reported twice

[Medlin Software, Dennis]

Likely a more accurate process than those who blanket send 1099's, even to those exempted by rule.  I used to get asked for TIN info from customers, even though they will not cross the 600 threshold.  When I declined to cooperate, they would usually say it was their policy to send to all, rather than spend time doing it properly.

For me, the K form is one more chance to revisit what the card processors grab from me every year (their thin slice, plus covering the cost of the "rewards").

[Pacun]

So, if I want to partner with the owner of ABC, LLC and I invest $10K from my 21 month interest free credit card, ABC, LLC will get a 1099-K?

[Catherine]

Yes, @Pacunbut the partnership records will show it as investment, not income.