There will be a 1099k for transactions processed by ACH and a 1099k for transactions processed by Credit Cards.  Your 1099-K from ProPay includes the total gross amount of transactions processed, which means it does not deduct chargebacks, ACH returns, or refunds. Here’s why:

1. IRS Reporting Requirements

The 1099-K reports total payment transactions processed before any deductions (refunds, chargebacks, ACH returns, fees, etc.). This is required by the IRS to track total gross sales, not net income.


2. Chargebacks, ACH Returns & Refunds Are Separate

  • Chargebacks & ACH Returns: These are reversals of transactions but do not reduce the total amount reported on a 1099-K. Instead, they are handled separately in your records.
  • Refunds: Similar to chargebacks, refunds do not reduce the gross transactions on a 1099-K. You must account for them separately in your tax return.

3. How to Report on Your Taxes

  • If your 1099-K total seems higher than your actual revenue, you should offset chargebacks, ACH returns, and refunds when reporting your business income.
  • You can do this by categorizing them as "Returns and Allowances" or deducting them as expenses on your tax return.