Circuit’s payment provider is considered a “Payment Settlement Entity” (PSE) by the IRS. When an individual (Payee) is paid for services via a PSE, a different tax code is applied by the IRS; The IRS no longer requires the Organization (Payer) to file a 1099-MISC because the 1099 reporting responsibility now shifts to the PSE, who has to file a 1099-K instead of a 1099-MISC.
The 1099-K reporting requirements replace the 1099-MISC requirements.
The threshold for filing a 1099-K is different than the threshold we’re all used to for a 1099-MISC. Instead of a $600 threshold per Payer, the Payee will only receive a 1099-K if they earn over $20K and receive over 200 transactions in a year through Circuit.
So what does this mean?
Please see our Terms for more details regarding tax requirements.
Additionally, here are some helpful reference points:
An excerpt from the 1099-K document that explains that if you file a 1099-K it replaces the need for a 1099-MISC - https://www.irs.gov/pub/irs-pdf/i1099k.pdf
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.
Useful articles that support the documents/excerpts above: