Important Information Regarding Virginia’s Enhanced Form 1099-K Filing Requirements
Virginia Tax is announcing changes to the filing requirements in Virginia associated with Form 1099-K. Virginia law now requires that a payment settlement entity submit to Virginia Tax either (1) a duplicate of each Form 1099-K that it submits to the IRS or (2) a duplicate of each Form 1099-K that it submits to the IRS related to a participating payee with a Virginia state address or that is a Virginia taxpayer. “Payment settlement entities” include:
- In the case of a payment card transaction, the merchant acquiring entity (defined as the bank or other organization which has the contractual obligation to make payment to participating payees in settlement of payment card transactions); and
- In the case of a third party network transaction, the third party settlement organization (defined as the central organization which has the contractual obligation to make payment to participating payees of third party network transactions).
This Virginia filing requirement applies to reportable payment transactions made on or after Jan. 1, 2020.
In addition, for Virginia tax purposes, third-party settlement organizations must now submit Form 1099-K information to Virginia Tax based on a different threshold than what is imposed for federal tax purposes.
- For federal tax purposes, third party settlement organizations are required to submit to the IRS Form 1099-K with respect to third party network transactions of a participating payee, if for the calendar year, reportable payment transactions with the participating payee exceed $20,000 and the total number of transactions with the participating payee exceeds 200.
- For Virginia tax purposes, third party settlement organizations are now required to submit Form 1099-K information to Virginia Tax to the extent that they make payments of $600 or more in a taxable year to another person who is not an employee in pursuit of the organization’s trade or business.
This may require certain third-party settlement organizations to report Form 1099-K to Virginia Tax even if they were not required to submit such information to the IRS. Such information is also required to be provided to the participating payee. This enhanced reporting requirement applies only with respect to participating payees with a Virginia mailing address and to reportable payment transactions made on or after Jan. 1, 2020.
Finally, payment settlement entities are required to submit Form 1099-K information to Virginia Tax electronically.
More information regarding these requirements, including due dates and the process for requesting a waiver, can be found in Tax Bulletin 20-10 and in the Laws, Rules, and Decisions section of our website.
If you have additional questions, go to www.tax.virginia.gov
, or contact us at 804.367.8037 for business tax questions.