Internal Revenue Code (IRC) Section 6050W states that all US payment processors, including Sports Connect, are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services through Sports Connect.
Sports Connect is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. In order to help you understand these information reporting obligations, we have prepared the following FAQs. After reviewing the following FAQs, we recommend you consult your tax advisor to assess tax implications of Form 1099-K reporting.
How will I know if these rules affect me?
Sports Connect will track the payment volume of your account(s) to check whether your payment volume exceeds 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
You may be asked to provide your tax ID number, such as a Social Security Number (SSN) or Employer Identification Number (EIN), to your existing account(s), if you don’t already have one on file.
If you cross the IRS thresholds in a given calendar year, Sports Connect will send Form 1099-K to you and the IRS for that year early in the following year.
*Some states have passed legislation stating a threshold of $500 USD in gross payment volume when distributing 1099-K tax documents. This payment volume was used when sending 1099-K documents from ProPay for partners on an individual merchant account. You can check your transaction volume against these thresholds by running a Daily Deposit Report within your Sports Connect account.
How is the $20,000 calculated?
As required by the rules, the $20,000 will be calculated by looking at a seller’s gross credit card payment volume for sales of registrations. Gross amount means that any adjustments for credits, cash equivalents, discounts, fees, refunded amounts or any other amounts will not be netted out.
Will all league partners receive a form 1099-K?
No. Only leagues/organizations who exceed the IRS thresholds will receive Form 1099-K. Leagues exceed the IRS thresholds when they receive over $20,000 USD in gross payment volume for the sale of goods or services AND receive over 200 separate payments for registrations in the same calendar year. Please note certain states have a lower threshold of $500 USD gross payment volume which in turn would require the 1009-K form to be provided.
Why did I receive a document from ProPay and Sports Connect/Blue Sombrero?
Our partners on individual accounts may have received separate 1099-K tax documents, one referencing Blue Sombrero and one referencing ProPay. During 2020, we began migrating our partners from a new merchant processor that supports StackPay, which is ProPay. If you were communicated with in regards to this migration last year, you received a separate tax document for payments made on your original Sports Connect merchant as well as for those made on ProPay.
You can look at it similarly to if you switched jobs mid-year, you would receive a W-2 from each employer. This is the same situation but in regards to payment processing.
Why does my 1099-K tax form say Affinity Sports and not Sports Connect?
Partners currently transacting in our Association solution are processing the registered entity Affinity Sports who operates under the DBA name of Sports Connect Association as part of the broader Stack Sports family.
I didn’t receive a Form 1099-K and thought I was supposed to. What should I do?
It’s possible that you had a PO Box or invalid address on file, if so please complete an online request form and we mail you a copy of your filing. NOTE: All users will be validated prior to documents being mailed to them.
Do I have to report the amounts from Form 1099-K on my tax return?
Please consult your tax advisor or contact the IRS for additional information on how the amounts reported on Form 1099-K should be reflected on your tax returns. Sports Connect cannot provide specific guidance on the tax implications of Form 1099-K reporting.
I have been a long-time partner with your company and have not received this document in the past. Why am I receiving this in 2020?
When we were acquired by Stack Sports and as part of our commitment to your organization, we have made several enhancements to our payment remittance and accounting processes, including issuing 1099-K tax documents to our partners crossing the IRS thresholds in a given calendar year ($20,000 USD in gross payment volume from sales of goods or services in a single year and 200 payments for goods or services in the same year).
I didn’t receive any of the collected funds, why was my Tax ID reported?
The IRS requires Sports Connect to report gross activity based on the origin source of the funds. To that end, for our customers who collect League, State, and/or District fees while having Stack Sports remit those fees directly to their corresponding parent entity, per IRS guidelines we are required to report the originating source’s (i.e Club’s) Tax ID not the Tax ID of the destination entity (i.e. League, State, District).
I still have questions, who should I contact?
You may submit a help ticket via our help center and someone from our support team will be happy to assist you. NOTE: For tax filing and reporting questions, please consult your tax advisor to discuss the tax implications of Form 1099-K.