Understanding a Gravity Payments Form 1099-K

By Marissa Cole, merchant-reporting documentation editor with eight years reviewing payment-support materials (editorial persona)
Last reviewed: July 12, 2026

Gravity Payments says merchants should receive Form 1099-K by January 31 for reportable payment activity from the previous calendar year. The figure in Box 1a represents gross payment volume, not the amount deposited after refunds, processing charges and other adjustments.

This independent guide is not operated by Gravity Payments and cannot correct a tax form or change the business information attached to a merchant account.

What Form 1099-K reports

Form 1099-K, Payment Card and Third Party Network Transactions, reports payments received through credit cards, debit cards, stored-value cards and certain third-party networks. A payment settlement entity sends a copy to the recipient and files corresponding information with the IRS.

Gravity says it is required to report the annual payment volume processed for its merchants. The actual filer may be Gravity, an acquiring institution or another entity identified on the form, depending on the processing arrangement. For correction requests, use the filer information printed on the tax document rather than assuming that every Gravity account has the same reporting entity.

The threshold on Gravity’s page is outdated

Gravity’s current support article still states that third-party-network transactions after 2021 are reportable once gross payments exceed $600. That language no longer matches the IRS guidance updated after the federal threshold was changed again.

The current federal distinction is:

Payment type	Current federal reporting rule
Direct credit, debit or stored-value card payments	No minimum dollar or transaction-count exception
Third-party settlement organizations	More than $20,000 and more than 200 transactions
Income reporting by the business	Income remains reportable even when no 1099-K is received

The IRS says all direct payment-card transactions must be reported on Form 1099-K. The $20,000 and 200-transaction threshold applies to third-party settlement organizations such as qualifying payment apps and online marketplaces, not ordinary card acceptance through a merchant acquirer.

Use the IRS rule first. Skip the obsolete $600 statement when deciding whether direct card volume is reportable.

Why the form is higher than bank deposits

Box 1a reports the gross amount of reportable transactions. The IRS instructions say that this amount is calculated before adjustments for fees, refunds, credits, discounts, shipping, cash equivalents or other deductions.

That creates a predictable mismatch.

Suppose a business processes $120,000 in card sales, issues $8,000 in refunds and pays $3,600 in processing costs. Bank deposits may be closer to $108,400 after those two adjustments, while Form 1099-K can continue to show $120,000 in gross payments.

The difference does not automatically mean the form is wrong. Merchant statements, batch reports and bookkeeping records are used to document returns, charges and other adjustments when the business calculates taxable income. The IRS specifically instructs recipients to compare Form 1099-K with payment-card receipts, merchant statements and their own records.

Do not report only the net bank deposits as gross sales without checking how the business’s accounting method treats processor fees and refunds. Tax treatment depends on the entity and return being filed, so a qualified tax professional should resolve account-specific reporting questions.

Check these fields before filing

The IRS recommends reviewing the payee information, gross payment amount and reporting entity before using the form.

Focus on:

• The legal business or individual name
• The final four digits of the payee TIN
• The account number
• Box 1a gross payment amount
• Box 1b card-not-present amount
• Box 2 merchant category code
• Box 3 transaction count
• Box 4 federal income tax withheld
• Monthly gross totals in Boxes 5a through 5l

Box 1b covers payments for which the card was not physically present or its details were keyed into a terminal. The IRS instructions list online, telephone and catalogue sales as common examples.

Box 3 counts payment transactions but excludes refund transactions. A merchant should not expect that field to equal the number of entries visible in a report containing sales, refunds, voids and other activity.

Correct a wrong name, TIN or amount

The IRS cannot change a Form 1099-K issued by a payment company. A merchant must contact the filer shown in the upper-left portion of the document or, when applicable, the payment settlement entity identified near the account-number area.

Request a corrected form when:

• The legal name or taxpayer classification is wrong
• The displayed TIN does not belong to the reporting business
• The gross amount includes transactions from another merchant
• A duplicate form was issued for the same activity
• Transactions before or after a business sale were assigned incorrectly
• The processing account remained attached to an old legal entity

Keep the original form, the correction request and the corrected copy. The IRS says taxpayers should not delay filing solely because the issuer has not yet supplied a correction. The return still needs to reflect the correct income using the records available.

Gravity directs general account-information changes to its support team. A legal-name, ownership or entity change should be handled before the next filing season rather than left until another form is produced under the old details.

Business sales and shared terminals create problems

A processing terminal should not continue under the seller’s tax identity after a business changes ownership.

The IRS warns that a form can include payments belonging to both the former and new owner when the terminal’s business name and tax information were not updated at the time of sale. It advises requesting a corrected form and retaining the purchase or sale agreement showing when the ownership changed.

Shared equipment creates a similar issue. When two businesses process payments through one merchant account, the Form 1099-K may combine transactions belonging to both. The account holder must maintain records separating those amounts and may have additional information-reporting responsibilities for the other party.

One terminal, one reporting identity.

Skip informal sharing arrangements unless the accounting and tax consequences have been reviewed.

Backup withholding and the 24% figure

Backup withholding can begin when the required taxpayer information is missing, incorrect or does not match IRS records. Gravity’s support page identifies an incorrect TIN and certain IRS underreporting notices as possible triggers and states that the current backup-withholding rate is 24%.

The amount withheld appears in Box 4 of Form 1099-K. IRS instructions require the filer to report backup withholding there.

Gravity’s article also states that withheld funds are not released directly by Gravity after the account information is corrected. They generally remain tax payments to be addressed through the applicable return for that tax year. The article’s separate statement that “Gravity Payments does not withhold your income” is confusing beside its backup-withholding explanation, so the form and any IRS or processor notice should control the account-specific analysis.

Correct the mismatch first. Do not send taxpayer information through an unsolicited email, text or telephone request.

What to do when no form arrives

The IRS says a payment-card processor should furnish Form 1099-K by January 31. Direct card payments do not have a minimum reporting exception, so a merchant with card activity may receive the form even when volume was modest.

Before contacting support:

1. Confirm that the business had settled card activity during the calendar year.
2. Check whether the form was issued by an acquiring bank or another named filer.
3. Review the mailing and legal-business information attached to the processing account.
4. Search business mail and approved electronic-document locations.
5. Gather merchant statements covering January through December.

Gravity’s public tax article does not identify a Dashboard menu for downloading Form 1099-K. It only says the merchant should receive the document by January 31. When the copy cannot be located, contact Gravity through its published support route and ask which filing entity issued the form.

FAQ

Does the $20,000 threshold apply to card sales?

No. Direct card payments have no federal minimum reporting exception.

Why is my 1099-K higher than deposits?

Box 1a reports gross transactions before processing fees, refunds, credits, shipping and discounts. Bank deposits generally reflect one or more of those adjustments, so the two totals often differ even when both records are accurate.

Does Form 1099-K show taxable profit?

No. It reports payment volume, not business profit. Expenses, returns, discounts and other adjustments must be supported by the business’s accounting records and reported on the appropriate tax return.

What if the form uses my old business name?

Contact the filer printed on the form and request a correction. Update the processing account’s legal-business information so future reporting matches the entity that receives and reports the income.

Are refunds removed from Box 1a?

No. The IRS defines Box 1a as gross reportable payments before refunded amounts and other adjustments. Refund records should be reconciled separately.

Why is federal tax shown in Box 4?

Box 4 records backup withholding. A missing or mismatched TIN can be one reason for withholding at the current 24% rate. The underlying issue must be corrected with the appropriate payer or IRS process.

What if a corrected form does not arrive before filing?

The IRS says not to postpone filing solely because a correction remains outstanding. Keep correspondence with the issuer, use the business records to report the correct income and follow the IRS instructions for handling an incorrect gross amount or TIN.

The practical sequence is to compare the form with full-year statements, separate gross volume from deductions and request corrections from the filer shown on the document rather than from the IRS.