1099-K and transaction date or settlement date

I believe I’ve uncovered an accounting nightmare for merchants who receive 1099-Ks. I noticed that some of my monthly totals for 1099-K were off by small amounts vs. my (very) detailed monthly accounting. Turns out, the 1099-K’s appear to have been generated based on transaction date, while my reporting is traditionally based on settlement date (i.e., the date the merchant receives the money).

I would consider the settlement date to be the constructive date of receipt, because that is the date the money is transferred to my account. However, the credit card processors are handling this based on transactional data, which causes irregularities because all my bank statements show the income in the subsequent month.

Since it is not possible for a merchant to make such a logical point to the IRS and be understood, the only solution appears to be to edit the dates of the offending transactions to reflect the month (and year) reported by the 1099-K.

Way to go, people.

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