@iable wrote:
@LeonardS
It has been my understanding that we shouldn't send a 1099 when a contractor is paid by credit card. The credit card processor is responsible for issuing a 1099-K.
I looked this up to verify and found these:
https://www.ericnisall.com/sending-1099-nec
https://www.irs.gov/payments/payment-card-transactions-faqs
Thanks.
I'm actually somewhat confused on this. The instructions for form 1099 say that a form is not needed for credit card payments.
https://www.irs.gov/instructions/i1099msc
However, a 1099-K is usually issued by third party payment processor, like Square or PayPal. I'm not aware that MasterCard or Visa issue 1099-K forms. So if you hire a contractor and pay by credit card and the contract accepts direct payments and does not use a third party settlement company, there's no way for the IRS to get notified of the payment except by your own 1099. So I don't really see any difference between paying with cash, a credit card, or check, when you -- for example -- hire a landscaper for the outside of your business or a paving company to paint new stripes on your parking lot.
I suspect the instructions are somewhat confused and out of sync with the regulations, but I don't have tike to dig through the actual regulations to see who is required to issue what form.
