Why it matters
A business that receives a 1099-K may need to reconcile the gross amount to its sales records, because the form can include shipping, fees, refunds and sales tax. The form does not replace the sales records.
Example
A seller receives a Form 1099-K from a marketplace showing $40,000 in gross payments. The seller's sales report shows $36,000 in net sales after refunds and fees, and the difference has to be reconciled.
Related terms
Questions about Form 1099-K
Who issues Form 1099-K?
The payment app, marketplace or card processor issues the form. The business does not issue a 1099-K to itself or to its customers.
Does a 1099-K replace a 1099-NEC?
Usually not. A 1099-K reports payments handled by the platform, while a 1099-NEC reports nonemployee compensation paid directly by the business. A payment can be reported on one or the other, not both.