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Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 638
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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I have a company, the business is selling online subscriptions.

Resolved Question:

I have a company, the business is selling online subscriptions. For the bank processing I use a third party company (that means i dont have my own merchant account). This company then collects the gross money and payouts to to affiliates and then sends me the net. They reported a 1099-K for my company, but the amount they reported includes the affiliate amounts. For example if I sold 300 dollars in gross transactions and 80 of those occurred from affiliates they still reported 300. I don't have access to these affiliates, I don't know who they are other then a company name and email.
1. Should the bank processing company be reporting gross including affiliate amounts?
2. Should i be reporting on my taxes the net i received or the gross transactions? I don't received gross revenue equal to the gross transactions because after you subtract chargebacks, returns and affiliate payouts its a different number.
3. The third party bank processing company says they do not 1099 the affiliates but arent they required to do do?
Submitted: 1 year ago.
Category: Tax
Expert:  Phillip B, EA replied 1 year ago.
Thanks for using JustAnswer.com! I will do my best to provide you with a clear and concise answer to your tax question based on the information that you have provided.

1.)To be honest, the IRS hasn't made it perfectly clear how the banks should be reporting the 1099-K in situations like yours. Therefore, the banks are left to interpret the law make their own policy on this issue
2.) I recommend reporting the amount of your actual gross cash receipts plus gross bank deposits for your business unless that amount is less than the amount reported on the 1099-K. If this is the case, I recommend reporting the gross amount from the 1099-K and deduct the affiliate amounts that you did not receive as commissions.
3.) The reporting requirements for form 1099-K are not totally clear.

If there are additional questions or concerns, please reply to my answer so that I may assist you further. If this answers your question, please rate my performance between Okay and Excellent performance so that I may receive credit for my work.

Thanks for your business.
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 638
Experience: Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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