IRS Reporting Fee

IRS Reporting Fee

An IRS Reporting Fee, sometimes also referred to as an IRS Filing Fee, is a fee some credit card payment processors may charge annually to cover the cost of reporting a business’ annual merchant volume to the IRS. 

There is no formal fee to submit this form, however, some credit card processors charge this fee to recover costs associated with the administrative work required to submit this form to the IRS and provide it to businesses.

Since 2011, this form, 1099-K has been required by the IRS for all merchant accounts that have a volume over $20,000 annually or over 200 payments per year.

According to the IRS, shifting the obligation to the payee is prohibited. Some payment processors may not be abiding by this guidance. 

Be sure to review all statements carefully and see if you have any fees that look like they might be related to the IRS.

If your processor is charging an IRS Filing Fee, you should be able to dispute it.

Complicating matters further, the IRS has now changed the rules effective for the 2022 tax year.

Starting January 1, 2022, any payee that receives a minimum $600 will need to receive a 1099-K form. There is also no minimum amount of transactions.

This is a dramatic increase in the number of payees that will need to receive this form and consequently much more work for payment processors.

The IRS has clarified that payments related to personal payments or reimbursements should not be included in 1099-K.

Many are protesting these changes and the National Taxpayers Union Foundation (NATU) has put out a recent statement criticizing the move, urging the government to revoke or increase the threshold.