October 20, 2011

Do the new 1099-K reporting requirements apply to me?

Posted by 2Checkout

Recently, the United States Government has enacted a law (Internal Revenue Code Section 6050W) which requires payment processors to send an IRS Form 1099-K to all US Sellers who process at least $20,000 and 200 transactions in a given year, starting with 2011. Here are some frequently asked questions and answers to determine how this law may affect you, and instructions on how to update your 2CO account.

What does 2CO need from me?

2CO will ask affected Sellers to confirm and/or update their 2CO account by providing a tax ID number and the appropriate corresponding contact information.

Your tax ID number is one of these:

  • Your Social Security Number (SSN)
  • Your Employer Identification Number (EIN)
  • Your Individual Tax Identification Number (ITIN)

Please use the guidelines below to determine which tax ID number to provide.

Business Entities with an EIN
Provide your company EIN and company name.

Sole Proprietors with an EIN
Provide your company EIN and your own name.

Individual Sellers and Sole Proprietors without an EIN
Provide your SSN or ITIN and your own name.

2CO will also need affected Sellers to confirm that their account name matches the tax ID number provided and to confirm their physical address so that if Form 1099-K is issued, we can report your information accurately to the IRS.

What if I don’t provide my Tax ID number?

If 2CO is unable to verify your information because it is incorrect or incomplete then, in order to comply with the law, soon 2CO will be required to withhold 28% on all your sales and remit it to the IRS. The withholding will end once you provide your tax ID number and corresponding contact information, and your information is verified by the IRS matching system.

How is the $20,000 calculated?

As required by IRC 6050W, the $20,000 will be calculated by looking at the Seller’s gross payment volume for sales of goods or services. Gross amount means that any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts will not be included in the total.

Are international 2CO Sellers affected by this new law?

All international Sellers who are being paid in US Dollars and/or paid to a US Bank Account must comply with this new law. As a result, international Sellers may need to certify their non-US status and their address by filling out IRS Form W-8BEN. International Sellers are encouraged to fill out the form and email it directly to 2CO at: risk@2co.com. Form W-8BEN can be found at: http://www.irs.gov/pub/irs-pdf/fw8ben.pdf. Please note that US Sellers living abroad may still be required to provide a tax ID number (Social Security Number (SSN), Employer Identification Number (EIN), or Individual Tax Identification Number (ITIN)). 2CO will be contacting those international Sellers affected by this law via email and/or mailing address.

If you have additional questions about this law and your 2CO account, please email legal@2co.com, however please know that while we’re committed to helping our customers understand the 2011 tax changes, 2CO is not qualified to give you specific tax guidance. Please contact a tax professional for specific tax concerns.

How do I update my 2CO account?

Please complete all steps.

2CO Account Updating Instructions:

1. Log in to your 2Checkout account

2. Click the “Account” tab.

3. Click the “Company Info” tab.

4. Select or confirm the legal entity type and the business incorporated status.

5. Click the “Save Changes” button at the bottom of the page.

6. Click the “Site Management” tab.

7. Confirm that the company name listed is correct. If your company is incorporated, please ensure that the company name listed on you 2CO Account is exactly as it is listed on your incorporation documents.

8. Click the “Save Changes” button at the bottom of the page.

9. Click the “Contact Info” tab.

10. Confirm that the business office email address, mailing address, and physical address listed on the account are correct. Update if necessary.

11. Click the “Save Changes” button at the bottom of the page.

12. Click the “Owner Info” sub-tab.

13. If you do not have an owner profile, click the blue lettering that says “Create New link” and enter your owner profile information, including the owner’s legal name, home address, city, and state/country/postal code.

14. If you already have an owner profile created in your account, confirm the owner’s legal name, email address, and mailing address listed are correct and update if necessary.

15. If entering an SSN, enter the number in the “SS#, Government ID#, or Passport#” field, and select “SSN” from the Primary ID type drop down menu.

16. If entering an EIN or ITIN, enter the number in the Secondary ID field and select “Other” from the Secondary ID type drop down menu.

17. Click the “Update” button at the bottom of the page.

If you have any questions on how to update your information, please email techsupport@2co.com.