**Updated 3/26/12 for mild audiences.
So what is all this 1099-K talk about?
This year, credit card processing companies (like Payline, NPC, First Data, etc.) as well as third-party network payments such as PayPal, Amazon.com and Google are required to report to merchants and to the Internal Revenue Service the gross amount of the transactions they’ve processed. This is due to the Federal Housing Assistance Tax Act of 2008 which included the enactment of Section 6050W of the Internal Revenue Code. This federal regulation will be used to help the IRS identify under-reported payment made to merchants by credit and debit card. The credit card processor is required to monitor your processing volume during the year and submit to the IRS the 1099-K that includes your gross sales for the year as well as a breakdown for each month.
Because of this change, many processors have seen this as an opportunity to charge yet another fee. These range anywhere from $5-$20 per month to $100.00 or more annually! They are calling this a Regulatory Fee as the IRS made it illegal to charge directly for the 1099-K. Read more