id = "1099-card-payments-are-excluded"
title = "Payments by card are left off Form 1099-NEC, and listed"
rule = """
A payment made by payment card (credit, debit or stored-value) or through a
third party payment network that section 6041 would otherwise cover is
reported by the payment settlement entity on Form 1099-K under section 6050W,
not by the payer on Form 1099-NEC or 1099-MISC, whoever's card it was. A
payment by check, ACH or transfer counts toward the payee's 1099-NEC. A
bank payment with no payment method recorded is presumed a check, ACH or
transfer; a debit-card payment from the bank is excluded once tagged with
the card.
"""
status = "AUTHORITY"
sources = [
  "Treas. Reg. §1.6041-1(a)(1)(iv) (docs/spec/sources/irs-1099-payment-method.md)",
  "Treas. Reg. §1.6050W-1(b)(1), (b)(3) (payment card; accepted as payment)",
  "IRS, Understanding your Form 1099-K (credit, debit or stored value cards)",
  "Instructions for Forms 1099-MISC and 1099-NEC (Rev. 12/2026), Form 1099-K",
  "DECISION D-40 (wanderbooks owner, 2026-10-20): an untagged bank payment counts",
]
tags = ["1099", "payment-card", "instruments"]

[setup]
currency = "USD"
fiscal_year_start = "01-01"
basis = "cash"
rounding = "half-away-from-zero"
cash_accounts = ["1000"]
financing_accounts = ["2100"]

[[setup.accounts]]
code = "1000"
name = "Bank"
type = "asset"

[[setup.accounts]]
code = "2050"
name = "Company card"
type = "liability"

[[setup.accounts]]
code = "2100"
name = "Due to Members"
type = "liability"

[[setup.accounts]]
code = "6000"
name = "Contract Labor"
type = "expense"

[[setup.instruments]]
label = "Harbor Visa"
kind = "business_card"
account = "2050"

[[setup.instruments]]
label = "Harbor debit card"
kind = "business_card"
account = "1000"

[[setup.payees]]
name = "Harbor Design LLC"
form = "1099-NEC"

[[events]]
date = "2026-02-10"
description = "Design work, charged to the company card"
payee = "Harbor Design LLC"
lines = [
  { account = "6000", side = "debit", amount = "2500.00" },
  { account = "2050", side = "credit", amount = "2500.00" },
]

[[events]]
date = "2026-03-10"
description = "Design work, paid with the debit card"
payee = "Harbor Design LLC"
instrument = "Harbor debit card"
lines = [
  { account = "6000", side = "debit", amount = "1200.00" },
  { account = "1000", side = "credit", amount = "1200.00" },
]

[[events]]
date = "2026-04-10"
description = "Design work, paid by check"
payee = "Harbor Design LLC"
lines = [
  { account = "6000", side = "debit", amount = "900.00" },
  { account = "1000", side = "credit", amount = "900.00" },
]

# By hand: counts 900.00 (the check); excluded 2,500.00 + 1,200.00 =
# 3,700.00 (the card's account, and the bank payment tagged with the debit
# card); 900.00 < 2,000.00: no 1099 is due.
[[expect]]
query = "vendor_1099"
payee = "Harbor Design LLC"
from = "2026-01-01"
to = "2026-12-31"
values = { status = "under_threshold", threshold = "2000.00", paid = "900.00", excluded_card = "3700.00", undetermined = "0.00", not_reportable = "0.00" }