Originally posted by @JR C.:
I understand the reporting only applies if BOTH of the criteria are met (The 20K and 200 transactions). Still, if both are met, it is not a requirement. It is optional. I understand it is only required when goods are sold that meet those two criteria (that's why PayPal does this too as they report from eBay). Cozy may consider selling leases and background checks as goods.
Yes, I agree. But cozy advertises itself as using ACH for rent payments. They (cozy) are reading the regulations differently than I am. PayPal has an account and money goes into your PayPal account. That money may sit there for 2 weeks. When you make purchases, vendors get paid through your account not via ACH. eRentPayment and IPN operate via ACH and payments from your tenants don't land in an account owned by eRentPayment or Intuit.
There is no need for 1099 filing for ACH providers like eRentPayment and IPN as they currently implement their services.
Specifically, from https://www.law.cornell.edu/cfr/text/26/1.6050W-1
(e) Examples. The following examples illustrate the provisions of this section: ...
Example 3. Automated clearinghouse network.
A operates an automated clearinghouse (“ACH”) network that merely processes electronic payments (such as wire transfers, electronic checks, and direct deposit payments) between buyers and sellers. There are no contractual agreements between A and the sellers for the purpose of permitting the sellers to use the ACH network. Thus, A is not a third party settlement organization under paragraph (c)(2) of this section, the ACH network is not a third party payment network under paragraph (c)(3) of this section, and the electronic payment transactions are not third party network transactions under paragraph (c)(1) of this section. A is not required to file the annual information return required under paragraph (a)(1) of this section.
Example 4. ACH processor.
B provides a variety of ACH payment processing services to a large number of merchants, such as converting checks received in payment of bills into ACH transactions. B groups payment transactions into an ACH file and transmits the ACH file into the ACH network on behalf of merchants in order to initiate payment to merchants through the ACH network. B makes payments to the merchants after the ACH network verifies that the customers' accounts have sufficient funds. Because the ACH network is not a third party payment network under paragraph (c)(3) of this section, B cannot be a third party settlement organization with respect to the ACH network. Similarly, because the ACH itself is not a third party settlement organization under paragraph (c)(2) of this section, B cannot be an electronic payment facilitator because B is not acting on behalf of a payment settlement entity. However, B may itself be operating third party payment network under paragraph (c)(3) of this section if B has a separate agreement or arrangement that: involves the establishment of accounts with B by a substantial number of unrelated merchants who provide goods or services and have agreed to settle transactions for the provision of the goods or services pursuant to the agreement or arrangement; provides for standards and mechanisms for settling the transactions; and guarantees persons providing goods or services pursuant to such agreement or arrangement that these persons will be paid for providing such goods or services.
See also: http://www.achrulesonline.org/achrules.aspx#p11
