Is Bitwage a Third Party Settlement Organization?


#1

Bitwage has been operating for some years and as a company, it does know whether or not it is a third party settlement organization (TPSO as determined by U.S. IRS).

The question that I, and I am sure other potential user have for Bitwage staff, is:

Is Bitwage a Third Party Settlement Organization?

Please answer (Yes / No).

If the answer is yes, please also answer the following question (which is not relevant if the answer to the initial question is “no”).

A TPSO is required to report payments made to a merchant on a Form 1099-K, Payment Card and Third Party Network Transactions, if, for the calendar year, both (1) the number of transactions settled for the merchant exceeds 200, and (2) the gross amount of payments made to the merchant exceeds $20,000.

Does Bitwage have a means for individual users to track when they are approaching the 200 transaction / $20,000 gross payment amount threshold, so that
individual user(s) can decide if they wish to continue accepting payments / completing transactions beyond that threshold via Bitwage? (Yes / No)


What requirements does Bitwage trigger for U.S. persons when you withdraw bitcoin?
#2

Our position is similar to that of Upwork.

If you’re a freelancer whom the I.R.S. defines as a “U.S. Person” and earn money working with your client through Bitwage, you need to report this income on your tax return.

Freelancers who are not U.S. persons are not issued forms.

Freelancers who are U.S. Persons and receive over $20,000 with more than 200 transactions through Bitwage – You will receive a new form called the Form 1099-K. Under the Internal Revenue Code Section 6050W, Bitwage will file a Form 1099-K form with the IRS for you, and you will receive a copy of your Form 1099-K via U.S. Postal Service in order to accurately report your taxes.


#3

Thank you for this answer. It is very helpful to have this spelled out for people who are wondering, and (regarding the answer you gave) perhaps that should be made part of the Bitwage FAQ as an answer to a question such as “How does Bitwage report your income?” or something to that effect.

A “feature suggestion:” For U.S. persons, you may want to add in a notification that alerts such users (by e-mail or perhaps by a notice when they log in) when they are approaching the 200 transaction / $20,000 gross payment amount threshold, so that they can decide how they want to proceed. While some people will not be concerned by crossing that threshold and will simply continue on, others will want to consider other options rather than cross over into 1099-K land. That is the user’s choice and thus the user should be notified by Bitwage of the approaching circumstance prior to the threshold being crossed.