I'm sorry their goal was not to go after small time ordinary landlords that receive rent through electronic platforms per say that report their rents and expenses on Schedule E, the target is the Airbnb's and Homeaway that are big business and transmit billions of dollars annually on homes advertised by the night (short term) which have to report their business activity on Schedule C and their 1099-K tax filing along with Hotels/Motels and BnB's.
So, if you own and are renting a property that is engaging in activity that is classified a short term rental (less than 30 nights), and or provides personal services for the renter during their stay and making deductions for things like the cost to pay for regular house cleaning, laundry pickup and delivery, prepared meals etc., you have crossed into being a Schedule C reporter and can enter the 1099-K where IRS has indicated. You probably are already required to charge a hospitality sales tax rate instead of the much less long term tax rate which is another way to define which schedule you should file on. How Schedule C handles Security Deposits, I'm not really sure that is something I would contact the IRS and find out. If you are required to report a 1099-K on Schedule C be aware it will contain any Refundable Deposits held in trust received electronically as income for which you will be taxed unless you have an offset entry!
