Supporting Statement

SUPPORTING STATEMENT
1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
Form 1099-K is in response to the requirement of Regulation section 1.6050W-1 that in a calendar year that a payment
settlement entity (PSE) of a Merchant Card and Third Party Network Payments, for payments made in settlement of
reportable payment transactions. A PSE is a domestic or foreign entity. A PSE makes a payment in settlement of a
reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the
instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction.
Payment settlement entities may have to report merchant card payments and third party network payments on Form
1099-K instead of Form 1099-MISC

2. USE OF DATA
Form 1099-K will allow the capture of data that reports payments made in settlement of merchant card and third party
network transactions to be used to compare taxpayer-reported income on individual and corporate tax return forms with
data submitted by payment settlement entities.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
We are offering electronic filing for Form 1099-K.

4. EFFORTS TO IDENTIFY DUPLICATION
We have attempted to eliminate duplication within the agency wherever possible. Payments that are reportable under
sections 6050W, 6041, and 6041A, are now reportable solely under section 6050W if they meet 6050W threshold
reporting requirements. If settlement payments do not meet the threshold for reporting under section 5060W, they will
continue to be reported under sections 6041 and 6041A, as appropriate.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES
It has been certified that the regulations will not have a significant economic impact on a substantial number of small
entities. Parties required to report under section 6050W will be primarily banks with over $175 million in assets and
third partty settlement organizations, which require establishment of accounts with a central organization by a
substantial number of persons.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR
POLICY ACTIVITIES
Not applicable.

Form 14029 (Rev. 4-2009) Catalog Number 51944B Page 4

Department of the Treasury–Internal Revenue Service

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT
WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
Not applicable.

8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY
OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS,
AND DATA ELEMENTS
Periodic meetings are held between IRS personnel and representatives of the American Bar Association, the National
Society of Public Accountants, the American Institute of Certified Public Accountants, and other professional groups to
discuss tax law and tax forms. During these meetings, there is an opportunity for those attending to make comments
regarding Form 1099-K.
In response to the Federal Register notice (76 FR 4744), dated January 26, 2011, we received one comment during
the comment period regarding this form. The comments have been forwarded to the originating office for review and
response. Consideration of any revisions to the form will be evaluated in future revisions or tax years.

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Generally, tax returns and tax return information are confidential as required by 26 U.S.C. 6103.

11. JUSTIFICATION OF SENSITIVE QUESTIONS
Not applicable.

12. ESTIMATED BURDEN OF INFORMATION COLLECTION
List the number of responses, time per response, and total burden for each form included in the submission.
Form
Responses
Response
Hours
1099-K
2000
18 minutes
620
Estimates of the annualized cost to respondents for the hour burdens shown are not available at this time.

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
As suggested by OMB, our Federal Register notice dated January 26, 2011, requested public comments on estimates
of cost burden that are not captured in the estimates of burden hours, i.e., estimates of capital or start-up costs and
costs of operation, maintenance, and purchase of services to provide information. However, we did not receive any
responses from taxpayers on this subject. As a result, estimates of these cost burdens are not available at this time.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
After consultation with various functions within the Service, we have determined that the cost of developing,
printing, processing, distribution and overhead for the form is $500,000.

15. REASONS FOR CHANGE IN BURDEN
There were no changes made to the document that resulted in any change to the burden previously reported to OMB.
We are making this submission to renew the OMB approval.

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
Not applicable.

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
See attached.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB PRA SUBMISSION FORM
Not appliable.
Note: The following paragraph applies to all of the collections of information in this submission:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless
the collection of information displays a valid OMB control number. Books or records relating to a collection of
information must be retained as long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

19. REASON FOR EMERGENCY SUBMISSION

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service