If you’re running a platform or marketplace, you may be required to file 1099 tax forms with the IRS and state authorities. A 1099 tax form is used to report various types of income and payment transactions. For example, a marketplace may issue 1099s to summarize earnings for independent contractors, while a software platform may issue 1099s to summarize their customers’ payment transaction volume. There are several types of 1099 TAX forms and we recommend consulting a tax advisor to determine your specific tax filing and reporting requirements.

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If you’re running a platform or marketplace, you may be required to file 1099 tax forms with the IRS and state authorities, and deliver physical or electronic copies to your sellers or service providers in the US.

A 1099 tax form is used to report various types of income and payment transactions. For example, a marketplace may issue 1099s to summarize earnings for independent contractors, while a software platform may issue 1099s to summarize their customers’ payment transaction volume. In addition, you’re required to file a 1099 tax form for each person or business from whom you withheld taxes, regardless of the amount of the payment.

There are several types of 1099 tax forms. We’ve summarized the most common forms that platforms and marketplaces using Connect may need to consider. We recommend consulting a tax advisor to determine your specific tax filing and reporting requirements.

*Prior to 2024, the 1099K threshold applied to accounts being based in the U.S. and having $20,000 USD in total gross volume and 200 transactions.

IRS penalties ranging from $60 to $310 per form may apply for each instance where you:

• Don’t file an information return with the IRS by the deadline
• Don’t provide the recipient a statement by the deadline
• Don’t report a Taxpayer ID (TIN)
• Report an incorrect TIN
• Report incorrect information
• Don’t provide the recipient with all required information
• Don’t e-file with the IRS when required to e-file

Larger penalties may be enforced where there is evidence of intentional disregard or neglect.

If you’re a Platform that is responsible for filing 1099s for your connected accounts, you can create, manage, file, and deliver 1099s directly from the Tax Reporting 1099 dashboard.

This article is neither legal advice nor tax advice. We recommend that you speak to your tax advisor with any questions or concerns around tax reporting.