1099-K Reporting Requirements Starting in 2022 (American Rescue Plan Act)
Effective January 1, 2022, a new legal requirement is going into effect that will represent a change for COMC customers who request cash-outs via check. Please note that this new requirement will not impact customers who request cash-outs via PayPal, as PayPal already handles on their end the sending of 1099-K forms to the IRS.
What is changing?
Due to a provision in the American Rescue Plan Act going into effect on January 1, 2022, IRS regulations require all businesses that process payments (such as COMC) to issue a 1099-K form for all sellers who receive $600 or more in sales during the calendar year. This change only applies to funds withdrawn starting on December 31, 2021 (as the last business day of 2021 is December 30, given that December 31 is a holiday).
To ensure all sensitive customer information is safe, COMC will require any customers requesting a check to work with a member of our Finance Team to register with Avalara. You can initiate this onboarding process from the Request a Check section of the Cash Out Store Credit page.
If you have multiple accounts associated with the same social security number (SSN), your thresholds are calculated by combining all payment transactions for the year. Additionally, registering with Avalara will be required for any check cash-out of any amount, not just SSNs that meet the $600 threshold. The requirement to submit necessary tax documents will be annual, starting over at the beginning of each calendar year.
For check cash-outs initiated in 2022, we will send you a 1099-K form by the end of January 2023. For check cash-outs initiated in 2023, we will send you a 1099-K form by January 2024, and so on. If you don’t receive a 1099-K from COMC by these dates, please contact us.
Who is affected?
These 1099-K reporting requirements will not impact you if you are a non-US citizen and non-U.S. resident selling on COMC. However, you will be required to provide a W-8 form to COMC to claim non-US status. COMC will provide, collect, and securely store the following forms via Track1099:
- W-9 (for US citizens, US residents, and US entities)
- W-8-BEN (for foreign individuals)
- W-8-BEN-E (for foreign entities)
Summary
- Because COMC processes payments for sales, the IRS regulations require us to issue a 1099-K for sellers who withdraw $600 or more in the same calendar year, starting in 2022.
- The $600 threshold is assessed per individual SSN, not per individual COMC account.
- Customers requesting checks will need to register with Avalara and utilize their Track1099 service to submit required tax documentation annually before being allowed to initiate a check cash-out. This requirement does not pertain to customers requesting PayPal cash-outs.
- 1099-K forms will be sent by COMC to customers and to the IRS by the end of January of the following calendar year for all check cash-outs initiated during the previous calendar year.
Please consult these general IRS FAQs or a tax professional if you have any questions about tax filing or regulations.