Why did I receive a 1099-K form from Paypal?

Due to IRS 6050W, Paypal and other payment providers are required to report to the IRS the total payment volume received by US account holders whose payments exceed both of these levels in a calendar year:

  •  $20,000 USD in gross payment volume from sales of goods or services in a single year
  •  200 payments for goods or services in the same year

This means that merchants who hit these limits will receive a 1099-K from Paypal (or another payment provider).  The IRS changes include all sales that occur starting January 1 of the year in which you are filing a tax return. For example, for Tax Year 2012, these will include all sales processed through your payment provider from January 1, 2012 through December 31, 2012.

Payment providers are required to send out 1099-K forms to all eligible merchants by January 31, 2013.

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