For the time starting back in the year 2011 and now into the future there is a new requirement for payment settlement entities such as Paypal etc. to report merchant card payments and third party payments.
Currently people were selling stuff on E-bay or Amazon, for example, and earning a serious amount of money in some cases.
Now the IRS has decided that they have been missing out on a lot of taxable money, and it was bound to happen that they would come up with a way to get it.
They want to get a cut of the action from the profits as is their due.
The IRS Form 1099K helps them to do just that. It is a way for them to know who is earning money in ways that they previously couldn't easily track.
Sending out the form is the concern of the companies that handle the third party transactions.
If you are involved in payments to foreign accounts etc., you should read the instructions about that, as well.
The seller waits for his/her 1099K to come in from the merchant card or third party payment company and files it like a regular 1099 at tax time.
Read more about the form 1099K at www.1099Forms.org this site is an authority site on 1099's
A lot of people break out in a nervous sweat and get the shakes when it comes time to file their taxes.
The first time that I tried to file by myself left me with a feeling of confusion because I did not bother to read any information about how to go about it in a fair way, a way that didn't leave me broke and living in a cardboard box in the alley.
I just had at it without reading anything and it was overwhelming. I assure you that after all these years I won't get into a difficult situation like that without any proper info and good forms to file.
Some folks just file as fast as they can to get it over with. They loose out on a bunch of legitimate deductions and allocations that could have saved them a ton of money at tax time.
I would rather be getting a nice tax refund than pay the IRS a lot of money. Pay attention to the details.