ProPay Annually sends IRS 1099-K forms to qualified merchants.
Details of qualification criteria can be located at https://www.irs.gov/businesses/understanding-your-form-1099-k
Additionally, some states have specific reporting requirements that may generate a 1099-K for a merchant.
Tax Year 2023 Updates
- The threshold for third-party network payments will remain > 200 transactions or > $20K in sales volume. Any merchant that processed beyond these thresholds will get a 1099-K for ACH.
The IRS again delayed the implementation of reducing those thresholds, as described on the IRS Website.
Data Validation
Partners and merchants should ensure their business, address and Tax Identification data on file with ProPay is accurate prior to Dec 31 each year to ensure accurate and timely delivery of 1099-K forms.
Payment Facilitation Partners with qualified merchants should receive a TIN-matching report via their SFTP Report subscriptions at https://xfer.propay.com monthly, which can be used to confirm with merchants that their data on file is correct.
Merchants using propay.com can manage their information by logging into the website.
Integrated Partners who host their own user interfaces can use the ProPay Account Edit API method to update merchant business information. *API edits do not affect prior-year data - a ticket must be submitted to make a correction to the prior year.
1099-K Form Delivery
Forms are delivered to the business address for the account (if present). Otherwise, they are mailed to the Know-Your-Customer (KYC) validated home address on file-the merchant principal's home address.
The forms will be sent from ProPay. Payment Facilitation partners whose merchants primarily interact with their website/solution may want to inform their merchants to expect the form directly from ProPay to avoid confusion about its purpose.
Previously, bulk PDF forms were delivered to some partners via https://xfer.propay.com. These may still be provided by ProPay, but are not intended to replace the process of physically mailing the forms to merchants directly.
1099-K Form Corrections and Updates
Integrated Partners should leverage the ProPay API Account Edit method (transType 42) to keep merchant information current.
Merchants who use propay.com can correct their data there and then contact ProPay's Customer Service team to request an updated 1099-K.
Changes for amended 1099-Ks should always be accompanied by an email to the ProPay support teams with supporting documentation and a request for an amended 1099-K.
If the data update is only for current and future years, no notification is needed to the ProPay support teams.
Address corrections only apply to subsequent years and do not generate a corrected form to be mailed.
Corrected or updated 1099-K forms may take 4-6 weeks to process.
Corrections are accepted until the end of June for the prior year.
Generally, corrections must be submitted by the 11th of the month in order to be included in files sent to the printer.
IRS 1099-K B Notices
B Notices are sent to merchants whose tax information did not match in prior filing years, and who may experience held funds or disabled processing if they do not supply accurate tax reporting information to ProPay for IRS filings.
Please see 1099-K B Notice FAQs for Merchants for more details.
Frequently Asked Questions (FAQs)
How will merchants receive 1099-K forms?
Direct mail from ProPay. Digital copies will be provided on request for corrected, missing or updated 1099-Ks.
Digital copies may be available for partners on xfer.propay.com SFTP site in February.
When will forms be sent?
Prior to Jan 31 each year.
To which address will the forms be sent?
Forms are sent to the business address on file (if present). Otherwise, they are sent to the Know-Your-Customer (KYC) validated home address on file, typically the merchant principal's home address.
Why did I or my merchant get 2 forms?
Credit card processing and ACH volumes are reported separately.
If the merchant qualifies for both forms of payment, they may receive two forms.
How are the totals calculated?
Volumes include all settled/completed credit card transactions or ACH transactions.
Credit Card processing is summed as Payment Card volume. ACH volume is reported as '3rd Party Processing'.
From tax year 2021 forward, volumes will no longer include Spendback and SplitPay volume.
As a Payment Facilitator, how do I locate data that requires updates to ensure proper TIN matching (Tax Identification Number)?
Payment Facilitators should be receiving a report via https://xfer.propay.com in the /Report1099K folder on a monthly basis containing data related to 1099-K eligible merchants.
Report Name Example: Affiliate 1099K Report for [Date].xlsx
If you are not receiving this report, please contact your relationship manager or Client Support to begin receiving it.
How should a merchant correct inaccurate data?
If the merchant uses an integrated Payment Facilitation partner solution, they should update the information on that solution, which should in turn update ProPay's system. If the data correction is for an amended 1099-K, the partner or merchant should contact ProPay support teams to request an amended 1099-K.
If the merchant uses propay.com to manage their account, they should correct data by logging in there and editing their profile and business information.
How long does a merchant have to correct invalid data?
For the current year, merchant data may be corrected up until Dec 31 without requiring a contact to contact ProPay.
To correct information on 1099-K forms for the prior year, merchants may submit corrections through June.
After June the year following the tax year, merchants will need to work directly with the IRS.
How should I request a copy of a missing or corrected 1099-K form?
Corrections made to Name or Tax ID will trigger the hard copy 1099-K corrected forms to be re-mailed.
Otherwise, merchants can contact ProPay Customer Service - customerservice [at] propay.com with their account number.
Payment Facilitation partners can email clientsupport [at] propay.com with the ProPay Account Number to request an updated form.
What if the 1099-K and data was reported to the IRS on the wrong Tax ID?
The merchant should submit a copy of a correct W-9 form to ProPay in order for the data to be corrected with ProPay and the IRS.
What if a merchant sold their business during the tax year?
The former owner should close the account and inform their Payment Facilitation Partner (if applicable) so that ProPay can be informed and the account can be closed. The new owner should create a new merchant account for the business using their own personal & tax details.
How long will it take to receive a corrected or updated copy of a 1099-K?
Processing requests for new forms may take up to 4-6 weeks. We are exploring ways to decrease that timing.
How can I get further help?
Merchants can contact our customer service team using the details at www.propay.com (866-573-0951), partners can continue to work with Client Support to request help with 1099-Ks.