"The payments that are included under this are not only those made directly by check but also those made by other means such as credit cards, for example. Think about the airlines, hotels, rental cars, and restaurants that appear on your credit card bill. You might not think of them as vendors of goods and services, but that is what they are. Also, if you are in the business of selling or distributing goods, all of your suppliers of products are also vendors under the new law. (Under existing law there are regulations that provide narrow exceptions for some types of vendors (telegrams, telephone, freight, storage) and some individual vendors that accept payment from you by credit card and meet qualifications set forth by the IRS. Even if some regulatory exceptions are carried over under the new law, you will still be the one responsible and liable for issuing the information report and it will not be easy.)"

http://www.stopform1099.org/

So, perhaps, in some cases.

Consider who is in charge - Gathers and Rangle, two frauds!

To cover your buts, printout the monthly Transactions for funds receivedd from Pay Pal showing the sites making the deposit into your account.  This is what you should report for income tax purposes.  Considering you are on a cash basis rather than accrual basis.

If you are audited, you can show that there was a duplicate filing of a 1099 (Pay Pal as well as each site.).  No agent can refute that.  If he/she tries; just appeal the decision to the Appelatte Division.  the Appeals officer will see things clearly.  If the Revenue Agent ever drags his heels after you supply information, call the IRS and ask to speak to the Problem Resolution Officer (PRO) in your Area.  The Pro will move things more quickly to resolve an issue; especially if you have tried to get something accomplished with a couple of call to the Examination Division.  Just don't panic or loose your temper.

Seems to me that this is going to work something like a Currency Transaction Report.  IRS will probably use it in their Special Enforcement Group to compare Reported Income to what shows up in a Transaction Report of some sort.  I wouldn't loose any sleep over it.

Sleep tight!
Roadrunner

Today's news:
http://money.cnn.com/2010/11/29/smallbusiness/1099_repeal/index.htm

Good that there's a chance it will be repealed, but the odds don't look too good that it is actually going to happen. 

Just received a response from one of my senators today.  Apparently the repeal of the 1099s for vendors failed to get enough votes.  Anyone who cares about this might want to consider sending another round of letters to your elected representatives.

Thank you for contacting me regarding reporting requirements for business transactions. Businesses are facing enough problems in this economy without having to deal with more government red tape. 
 
     That�s why I voted for an amendment introduced by Senator Johanns to the Food Safety bill (S.510) that would have fully repealed any new information reporting requirements. Unfortunately, the measure failed to receive enough votes to overcome a procedural motion. However, I am still committed to finding real solutions to the challenges faced by the business community, and I will press my colleagues on both sides of the aisle to support a full repeal of these onerous requirements.

Mailed my congressional peeps this morning.

http://www.gazette.net/stories/12172010/businew185530_32543.php

I wrote to mine the other day.  I'm especially hoping Rep. Lungren responds and tells me where he's at with the bill he wrote and sponsored in the House (and then later couldn't vote for  ).

Yeah, it was good to see that this is apparently something they can all agree on, although I don't know why it failed before.

http://money.cnn.com/2011/01/21/smallbusiness/1099_repeal_effort/index.htm

Yeah, it would be great to see this finally put to rest.  The amount of paperwork you have to do as a small business is already onerous enough.