This article is intended to clarify the role of Assignr, and our partner Dwolla, with regard to payments made and IRS tax reporting responsibilities of organizations using our platform to pay officials. If you pay officials on our platform, then this article is intended for you.
When you pay officials on the Assignr website, per our service agreement with you, you are required to open a Dwolla Platform Account, provided by Dwolla, Inc. Dwolla is the vendor and payment processor that you are using to facilitate payment between your organization and your officials. All interactions with the Dwolla platform happen on our website. This account is opened when you go through the setup process on the Assignr website.
Although you use the Assignr website to pay your officials, you are using your Dwolla Platform Account to pay your officials. We send instructions to Dwolla, and they (through their financial institution partners) withdraw funds from your bank account and disperse them to your officials. Any transaction fees charged by Assignr from these payments are included in the withdrawal, and are transmitted to Assignr through the Dwolla platform.
What is a 1099-NEC form?
From the IRS website:
If you pay independent contractors, you may have to file Form 1099-NEC, Nonemployee Compensation, to report payments for services performed for your trade or business.
If the following four conditions are met, you must generally report a payment as nonemployee compensation.
You made the payment to someone who is not your employee;
You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);
You made the payment to an individual, partnership, estate, or in some cases, a corporation; and
You made payments to the payee of at least $600 during the year.
What is a 1099-K Form?
From the IRS website:
Form 1099-K is a report of payments received for goods or services during the year from:
Credit, debit or stored value cards such as gift cards (payment cards)
Payment apps or online marketplaces, also called third party settlement organizations or TPSOs
Examples of TPSOs include PayPal, CashApp, and Venmo.
1099 Reporting - What is required?
If you employ referees or umpires as independent contractors, you are required by the IRS to furnish a 1099-NEC form to contractors who earn $600 or more during the calendar year.
From a tax reporting reporting persepctive, it is important to know the differences between using Dwolla through Assignr, and other payment processors such as PayPal, Venmo or CashApp.
When you use a service such as PayPal, Venmo, or CashApp, any funds sent to a recipient are reported to the IRS by the payment processor on a 1099-K form.
However, when you use Assignr, and our partner Dwolla, to pay your officials as independent contractors, this revenue is NOT reported to the IRS on a 1099-K form. As such, it is important for you to report the amounts paid to your officials on a 1099-NEC form. Fortunately, Assignr can help you with this task, as we include this service as a part of the fees we charge to pay officials.
Is Assignr a Third Party Settlement Organization (TPSO)?
No, Assignr is not a TPSO.
Is Dwolla a Third Party Settlment Organization (TPSO)?
Yes, Dwolla is considered a TPSO.
Does Dwolla or Assignr report money sent to officials on a 1099-K form?
No, we do not. Although Dwolla stores official's bank account information in their systems, officials who are paid on our platform do NOT have a Dwolla Platform Account. As such, officials will NOT receive a 1099-K form from Dwolla or Assignr.
It is required that, if you have officials that meet the criteria for IRS 1099-NEC reporting, that you report payments sent to your officials on a 1099-NEC form, and transmit those forms to the IRS. The 1099-NEC form you issue should list your organization's EIN/SSN as the payor, and the official's EIN/SSN as the recipient.
Assignr includes 1099-NEC processing this as a part of our service to organizations who pay officials through our platform. Alternatively, you can manage this process on your own.
Does Assignr act as a pass-through or third party payment provider for your officials?
No, we do not. When you initiate a payment from the Assignr website, we transmit your instruction to Dwolla. Dwolla facitates an ACH transaction between a payor's bank account and your officials. When officials are paid, your funds do not ever pass through an Assignr bank account.
All funds transfers made using the Dwolla Platform are performed by one or more Dwolla financial institution partners, and any funds held in a Dwolla Balance are held by a financial institution partner of Dwolla.
When Assignr charges a transaction fee, these fees are transmitted to Assignr through the Dwolla network.
Should I send Assignr a 1099-NEC for payments processed?
In short, no. Assignr is a Limited Liability Corporation, and as such, does not require a 1099-NEC form be sent to us for services rendered.
If you send Assignr a 1099-NEC form that includes amounts you paid to your officials, to continue using our platform to pay officials, we will require that the 1099-NEC be voided, or reduced to only include the fees you actually paid to Assignr.
Fees paid to Assignr include our platform usage fees (either per-official or per-game fees), and payment transaction fees (fees paid for facilitating payment between your organization and an official who worked for you).
As a payer, will Dwolla send me a 1099-K form?
Generally speaking, no, since payors are sending money to officials and not receiving money. 1099-K forms are only sent to individuals or companies who receive money through a Third Party Settlement Organization.
When Assignr issues a 1099-NEC form, who is listed as the payor?
Since Assignr is not the third party payment provider, and Dwolla does not issue a 1099-K to your officials, all 1099-NEC forms issued by Assignr to officials will be issued with your organization's name and EIN/SSN as the payor. We will NOT list Assignr as the payor, or use the Assignr EIN as the payor, because we didn't employ or pay your officials (you did!)
Assignr issues a 1099-NEC form on behalf of each payor. When an official works for multiple organizations, an official may receive one or more 1099-NEC forms, one from each organization that paid them $600 or more during the calendar year.