IRS Reporting Regulations on Third-Party Payment Transactions

Due to Internal Revenue Service (IRS) regulations, U.S. third-party settlement organizations and payment processors, including Amazon, are required to file Form 1099-K for U.S. taxpayer sellers who meet the following thresholds in a calendar year:

• More than US $20,000 in unadjusted gross sales, and
• More than 200 transactions.

IRS regulations require non-U.S. taxpayers to provide Form W-8BEN to Amazon in order to be exempt from U.S. tax reporting requirements.

Because Amazon Services International, Inc. (ASII) is a U.S. company, these requirements apply to all Amazon.ca seller accounts, regardless of country of residence.

Providing Your Taxpayer Identification Information to Amazon

As a result of these and other upcoming regulations, the following sellers are required by Amazon to provide taxpayer identification information to Amazon:

• All Professional sellers
• Individual sellers that exceed 50 transactions in a calendar year, regardless of sales volume

You can provide your information to Amazon by clicking here and using a self-service interview process that will guide you through entering your taxpayer information and validating your W-9 or W-8BEN form. In order to fulfill the IRS requirements as efficiently as possible, answer all questions and enter all information requested during the interview.

Avoid misspellings or entering incorrect Tax Identification Numbers, both of which can result in an invalidated tax form. Move forward or backward through the interview process at your own pace. Don't worry if you're not sure which form (W-9 or W-8BEN) applies to you. The answers you provide during the interview will automatically determine that for you. To help protect the security of your taxpayer identification information, please do not disclose it by e-mail or over the phone.

Help is available throughout the interview process, including links to IRS publications that support the IRS forms W-9 and W-8BEN.

See answers to frequently asked questions below, and learn more at the IRS website.

Important Notice: Information in this document does not constitute tax, legal, or other professional advice and must not be used as such. To find out how this new legislation will affect your business, or if you have other questions, please contact your tax, legal, or other professional adviser.

Frequently Asked Questions

• Where can I learn more about the 1099-K and the 6050w regulations?
• How do the regulations apply to Amazon sellers?
• Do these regulations apply to non-profit organizations?
• What happens if I don't provide the required information?

• I am a U.S. taxpayer. What information do I need to provide to Amazon?
• I am a not a U.S. taxpayer. Do I need to provide any information to Amazon?
• I am not going to come even close to hitting the reporting threshold. Why does Amazon require my tax identity?
• I've updated my tax identity. How long will it take to see if it is valid?
• I received an e-mail stating that my tax identity information is invalid. I thought I provided my correct information. Can you tell me why it came back invalid?

• Will I receive a Form 1099-K for my seller account?
• When can I expect it?
• Where do I find my Form 1099-K that Amazon issued for my seller account?
• I did not receive my Form 1099-K in the mail. What address was it mailed to?
• Is the US $20,000 calculated based on net sales or gross sales?
• Why are sales tax and shipping charges included in my unadjusted gross sales amount?
• Doesn't the gross sales amount change if I refund an order?
• If I have multiple seller accounts with the same tax identification number and they exceed the thresholds when the account totals are combined, will you file Form 1099-K for my combined seller accounts?
• Are there instructions on how to use the 1099-K for my tax return?
• Can Amazon help me with my tax return?
• How do I save a copy of the Form 1099-K to my computer?
• I saved the PDF to my computer, but I no longer remember the password. How can I get another copy of my Form 1099-K?
• I believe there is an error on the Form 1099-K I was issued. How do I get an updated Form 1099-K?

• How do I find the transactional level details of my unadjusted gross sales for a specific year?
• My seller account generated more than 600 transactions in a calendar year. How do I find the transactional level details of my unadjusted gross sales for a specific year?
• How can I calculate my unadjusted gross sales for a calendar year using settlement reports?

Regulations

Where can I learn more about the 1099-K and the 6050w regulations?

The regulations are under section 6050W of the Internal Revenue Code. Please see the IRS website for more information.

How do the regulations apply to Amazon sellers?

Amazon requires all Professional sellers and Individual sellers that exceed 50 transactions in a calendar year, regardless of sales volume, to provide taxpayer identification information to Amazon.

Enter your tax identity information using the short interview process available in your seller account. From the Settings tab select Account Info and then click Edit for the Legal Name section. Note that this interview can only be accessed by the primary user of your seller account.

Enter your information now

To help protect the security of your taxpayer identification information, we will not ask you to disclose it by e- mail or over the phone.

Do these regulations apply to non-profit organizations?

Yes, these regulations apply to both non-profit and for-profit organizations and entities.

What happens if I don't provide the required information?

If you have not provided valid tax identity information, your seller account will be considered in violation of our Amazon.ca selling policies and your account will be suspended.

Tax Identity Collection & Validation

I am a U.S. taxpayer. What information do I need to provide to Amazon?

By completing the tax interview in your seller account, you will be providing Amazon the appropriate tax identity in the form of a W-9 or W-8BEN form.

For U.S. taxpayers, a TIN is required by the IRS for the administration of tax laws. In most cases, your TIN is either an Employer Identification Number (EIN) or a Social Security Number (SSN).

Learn how to obtain an EIN at the IRS website.

I am not a U.S. taxpayer. Do I need to provide any information to Amazon?

If you are a non-U.S. taxpayer, the responses you provide to the tax interview wizard questions will create the appropriate tax form on your behalf.

IRS regulations require non-U.S. taxpayers to provide Form W-8BEN to Amazon in order to be exempt from U.S. tax reporting requirements.

I am not going to come even close to hitting the reporting threshold. Why does Amazon require my tax identity?

It is Amazon's policy for Amazon.ca Professional sellers and Individual sellers that exceed 50 transactions in a calendar year, regardless of sales volume, to provide taxpayer identification information to Amazon.

I've provided my tax identity. How long will it take to see if it is valid?

Validations can take up to three weeks to complete. After you update your tax identity information, the Legal Name section of your Account Info page will display "Provided and Pending Validation." If we find your information doesn't match IRS records, we will send you an e-mail with instructions on how to proceed.

I received an e-mail stating that my tax identity information is invalid. I thought I provided my correct information. Can you tell me why it came back invalid?

We don't know exactly why your tax identity information came back as invalid, but here are some things to consider:

• If you are completing the tax identity information as an individual US taxpayer, use the information that appears on your Social Security card.
• If you are completing the information as a business US taxpayer, use the name that appears on your CP575A notice from the IRS if you are providing a business name.
• Misspelling your name, not including your middle initial or middle name, or entering an incorrect Tax Identification Number may cause tax identity information to not match to IRS records.

Reporting & Document Retrieval

Will I receive a Form 1099-K for my seller account?

If you are a non-U.S. taxpayer and exempt from U.S. tax reporting requirements, you will not receive a Form 1099-K.

For each calendar year, if you had at least US $20,000 in unadjusted gross sales and 200 or more transactions, a Form 1099-K will be provided to you. If you did not meet both of these thresholds, you will not receive a Form 1099-K. We will track your unadjusted gross sales and number of transactions. You will also be able to tell if you have exceeded the thresholds by monitoring your unadjusted gross sales and number of transactions in your seller account.

When can I expect it?

Amazon will make available to you a copy of your form on or before January 31 of the following year. If you did not consent to electronic delivery, the form will be postmarked on or before January 31 of the following year and will be mailed to the address provided by you in the tax interview. If you consented to electronic delivery, Amazon will send an e-mail to you on or before January 31, of the following year, which will include instructions on how to retrieve your Form 1099-K. For more information on the Form 1099 filing instructions, please visit the IRS web site: http://www.irs.gov/pub/irs- pdf/i1099gi.pdf.

Where do I find my Form 1099-K that Amazon issued for my seller account?

You can find the form in your seller account. From the Reports section, select Tax Document Library, then the appropriate year, and then Form 1099-K.

I did not receive my Form 1099-K in the mail. What address was it mailed to?

The Form 1099-K was mailed to the address you provided in the tax interview. You can also retrieve the form from your seller account. From the Reports section, select Tax Document Library, then the appropriate year, and then Form 1099-K. Click the "Download PDF" link, enter the password, save the form to your computer, and print a copy of it.

Is the US $20,000 calculated based on net sales or gross sales?

The US $20,000 is calculated based on unadjusted gross sales. Unadjusted gross sales means the total sales, unadjusted for fees or refunds. It is the amount the buyer paid for an order even if the order is later refunded.

Why are sales tax and shipping charges included in my unadjusted gross sales amount?

Unadjusted gross sales equals the amount the buyer paid for the order and includes sales proceeds, sales tax, and gift-wrap and shipping charges.

Doesn't the gross sales amount change if I refund an order?

No. When you make a sale, the order total becomes a permanent part of your unadjusted gross sales for the year. Even if you later refund the entire amount a buyer paid for an order, the order total is still included in your unadjusted gross sales calculation. The IRS regulations require that no adjustments to gross transaction amounts be made. Please seek advice from a tax professional to understand the appropriate adjustments when preparing your tax return.

Here is an example that includes a discount to the buyer, an Amazon fee, and an eventual full refund to the buyer:

Item price $100
Seller promotional discount -$10 (subtracted before the gross sales amount is calculated)
Shipping charge $15

Order total $105 (gross sales amount)

Amazon fee -$20 (subtracted after the gross sales amount is calculated)

The buyer is later refunded in full.

Buyer credit of the order total -$105
Seller credit of the Amazon fee $20
Net $0

The gross sales amount for the purposes of calculating annual gross sales is $105, even after the refund.

If I have multiple seller accounts with the same tax identification number and they exceed the thresholds when the account totals are combined, will you file Form 1099-K for my combined seller accounts?

Yes. Unadjusted gross sales and transaction volumes will be consolidated for all accounts that have the same Tax Identification Number (TIN). Please assist us by providing your taxpayer identification information in each of your seller accounts regardless of thresholds. This will help ensure that we report all accounts with the same TIN on Form 1099-K as required by the new regulations.

Are there instructions on how to use the 1099-K for my tax return?

To find out how this legislation and Form 1099-K affect your business, or if you have other questions, please contact your tax, legal, or other professional advisor.

For Individual filers, see these IRS instructions: http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

For legal entity filers, see Form 1120: http://www.irs.gov/pub/irs-pdf/f1120.pdf

Can Amazon help me with my tax return?

While we are committed to helping sellers understand the requirements under these new tax regulations, we do not provide tax guidance. Please contact a tax professional.

How do I save a copy of the Form 1099-K to my computer?

From the Reports section in your seller account, select Tax Document Library, then the appropriate year, and then Form 1099-K. Click the "Download PDF" link and enter the password. To save the form to your computer, while it is open in Adobe Reader, click File, then Save As, and then PDF. Select a location on your computer and click Save.

For your security your tax form is password protected. The password provided on the Tax Document Library page is required for opening the tax form. If you save the form to your computer, be sure to save the password also because it is required each time you open the file.

If you didn't save the password, log in to your seller account, and from the Reports section, select Tax Document Library. A new password will be provided. Click the "Download PDF" link and enter the new password.

I saved the PDF to my computer, but I no longer remember the password. How can I get another copy of my Form 1099-K?

For your security your tax form is password protected. The password provided on the Tax Document Library page is required for opening the tax form.

If you didn't save the password, log in to your seller account, and from the Reports section, select Tax Document Library. A new password will be provided. Click the "Download PDF" link and enter the new password.

Be sure to save the password because it is required each time you open the file.

I believe there is an error on the Form 1099-K I was issued. How do I get an updated Form 1099-K?

Please contact Seller Support by clicking the Contact Seller Support link at the bottom of any seller Help page, and provide the details of the issue.

1099 Form Reconciliation

How do I find the transactional level details of my unadjusted gross sales for a specific year?

You can find your unadjusted gross sales for a specific year (based on order date) by following these steps:

See the note below to determine whether different instructions apply for your seller account.

1. From the Reports tab in your seller account, select Payments.
2. Click Transactions.
3. Click "Custom date range" and select a date range from the beginning of the year to the end of the year. For example, for 2011, select "From" date 1/1/11 and "To" date 12/31/11.
4. From the "Filter view by" drop-down, select "Order Payment."
5. Click the Update button.
6. Click the Download button to download your transactions and then choose the option to save the file. It will be saved as a tab-delimited text file (.txt).
7. Open the saved file from any spreadsheet or database program, such as Microsoft Excel or Access.
8. Sort the file by the "Payment Type" column.
9. To calculate unadjusted gross sales, add the amounts in the "Amount" column, being sure to leave out all rows that have "Amazon fees" in the "Payment Type" column.

Note:
 The Order Payment report uses order date; however, transactions that are reportable for the Form 1099-K are based on shipment date. The Form 1099-K issued for your seller account reflects your unadjusted gross sales based on shipment date.
 If an order was split into multiple shipments, the report can have multiple entries for the order, each of which counts toward the order total.
 If your seller account generated more than 600 transactions in a calendar year, follow these instructions instead.
 If your seller account generated more than 600 transactions per day, please contact Seller Support.

My seller account generated more than 600 transactions in a calendar year. How do I find the transactional level details of my unadjusted gross sales for a specific year?

You can find your unadjusted gross sales for a specific year (based on order date) by following these steps:

See the note below to determine whether different instructions apply for your seller account.

1. From the Reports tab in your seller account, select Payments.
2. Click Transactions.
3. Click "Custom date range" and select a date range that will limit the number of transactions to less than 600.
   

   We recommend that you analyze your business trends to determine what date ranges work best. Start by selecting monthly ranges, and if the report does not provide the full month, select a weekly range.

   One way to see how many transactions you might have in a given date range is to select a short date range, such as one or two weeks, click Update, and then click Download. The downloaded file will show the number of transactions on the second row, in the upper left corner. If the transaction total is 600, the report probably does not include all transactions from the date range, because it does not pull more than 600 transactions. In that case, select shorter date ranges so the total for each is less than 600.

4. From the "Filter view by" drop-down, select "Order Payment."
5. Click the Update button.
6. Once you have determined the appropriate date ranges for your account, click the Download button to download each set of your transactions, and choose the option to save the file after each download. The files will be saved as tab-delimited text files (.txt).
7. Open each saved file from any spreadsheet or database program, such as Microsoft Excel or Access, and manually merge all of them.
8. Sort the merged file by the "Payment Type" column.
9. To calculate unadjusted gross sales, add the amounts in the "Amount" column, being sure to leave out all rows that have "Amazon fees" in the "Payment Type" column.

Note:
 The Order Payment report uses order date; however, transactions that are reportable for the Form 1099-K are based on shipment date. The Form 1099-K issued for your seller account reflects your unadjusted gross sales based on shipment date.
 If an order was split into multiple shipments, the report can have multiple entries for the order, each of which counts toward the order total.
 If your seller account generated more than 600 transactions per day, please contact Seller Support.

How can I calculate my unadjusted gross sales for a calendar year using settlement reports?

You can find your unadjusted gross sales for a specific year (based on order date) by following these steps:

1. From the Reports tab in your seller account, select Payments.
2. Click All Statements.
3. Download the settlement reports for the periods containing transactions from January 1 to December 31 of the required calendar year. If buttons are available to "Download Flat File" and "Download Flat File V2," select the same type each time so the column headings of all your downloaded reports will match. The files will be saved as tabdelimited text files (.txt).
   
   Note: Downloadable settlement reports remain available for 90 days. To generate a downloadable report for a prior settlement period, click the Request Report button for that specific period. Return to the All Statements page later to download the generated report. It can take up to 24 hours to generate the downloadable report.
4. Open each saved file from any spreadsheet or database program, such as Microsoft Excel or Access, and manually merge all of them.
5. Remove any transactions that occurred before January 1 or after December 31 of the required calendar year.
6. Filter the column titled "transaction-type" and select "Order"
   

   If you selected "Download Flat File V2" follow these steps next:

   1. Filter the column titled "amount-type" by selecting "ItemPrice" and "Promotion"
   2. Filter the column titled "amount-description" by selecting "Principal," "Shipping," "SalesTax," and "GiftWrap"
   3. To calculate unadjusted gross sales, total the column titled "amount"

   If you selected "Download Flat File" follow these steps next:

   1. Filter the column titled "price-type" by selecting "Principal," "Shipping," "SalesTax," and "GiftWrap"
   2. Total the column titled "price-amount"
   3. Filter the column titled "promotion-type" by selecting "Shipping" (if it exists for that column) and total the column titled "promotion-amount"
   4. To calculate unadjusted gross sales, add the "price-amount" total and the "promotion-amount" total (if any)

Note:
 These reports use order date; however, transactions that are reportable for the Form 1099-K are based on shipment date. The Form 1099-K issued for your seller account reflects your unadjusted gross sales based on shipment date.
 If an order was split into multiple shipments, the report can have multiple entries for the order, each of which counts toward the order total.