1099 Misc: is eCheck considered a 'check' or a '3rd Party Transaction?' The new rules state that these different types of payment transactions should be reported differently. Checks are on the 1099-Misc (filed by the small business) and 3rd Party Transactions are on the 1099-K (filed by the payment processor) So how are eCheck classified?
I had this same questions and called the IRS Information Reporting department at 1 (866) 455-7438 (open M-F, 8:30 AM – 4:30 PM EST).
What they told me is:
You must file a 1099-MISC for service providers you paid with an eCheck. That's based on the following answer, from IRS.gov FAQ's on New Payment Card Reporting Requirements:
Does an automated-clearing house qualify as a third-party settlement organization?
No. An automated-clearing house merely processes electronic payments between buyers and sellers through wire transfer, electronic checks and direct deposit. Further, there is no contractual relationship between the automated-clearing house and payees. Thus, an automated-clearing house does not qualify as a third-party settlement organization and payments on its network are not reportable.
