With the start of the 2016 tax reporting season, taxpayers making certain payments to a person or entity with a Tennessee address may find that Tennessee has added to the number of information returns they need to file.
Section 67-6-411 was added to the Tennessee Code on May 4, 2015, and requires "reporting entities" to file a duplicate Form 1099-K with the Tennessee Department of Revenue where the payee listed on the Form 1099-K has a Tennessee address. The statute defines a "reporting entity" as a "payment settlement entity," incorporating the definition of that term found in Section 6050W of the Internal Revenue Code (which is effectively any entity that makes a payment to a payee in a payment card transaction), or any other third party acting on behalf of a payment settlement entity. Said just a little differently, any entity which submits instructions to transfer funds to a payee or has the contractual obligation to make sure such payments are made to the vendor in a credit card transaction (these entities are often referred to in the industry as "acquiring" or "merchant banks") is responsible for filing Form 1099-K, Merchants Card and Third-Party Payments, to the IRS and is now also responsible for submitting that IRS form to the Tennessee Department of Revenue.
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