Accepting Online Payments as a Booster Club: Fees and 1099-K

Types of Payment Tools

Use payment systems designed for business use, not personal ones. Any account that receives deposits or makes payments, including a digital payment account, is treated as a bank account: it is reconciled monthly and appears in the treasurer’s report.

Setting Up in the Club’s Name

1. Open each account as a business or nonprofit account in the club’s exact legal name.
2. Provide the club’s EINEINEmployer Identification Number: the nine-digit federal tax identification number the IRS assigns to the club. The club needs it to open a bank account, apply for 501(c)(3) status, and file its annual return.All terms, never an officer’s Social Security number. The tax ID on the account decides whose name goes on any Form 1099-K.
3. Link payouts only to the club’s operating bank account.
4. Register the account with a club-owned email address and give at least two officers individual administrator logins. Give the reviewer view access if available.
5. Record the account in the treasurer’s account list and the officer transition checklist.
6. Turn off automatic transfers to any account other than the club’s bank.

Never collect club money in a personal app account. The IRS says payments from friends and family as gifts or repayment of personal expenses should not be reported on Form 1099-K, but booster dues, ticket sales, and fundraiser orders are not personal payments, and running them through a volunteer’s account mixes club and family money. The risk is not hypothetical: in a 2026 Tennessee case, the Comptroller’s Office reported that $44,821.92 moved from a band booster club’s payment app account to the treasurer’s personal bank account or to a family member. See Preventing Embezzlement in Booster Clubs.

Fees

Processors charge a percentage of each payment, a fixed amount per transaction, or both. Some platforms add a platform fee or invite payers to add a tip to the platform. Read the fee schedule before signing up and put a fee line in the budget.

An illustration, using assumed rates rather than any provider’s actual price: a parent pays $50 in dues, and the processor charges 3 percent plus $0.30.

The treasurer records $50.00 of dues income and $1.80 of processing fee expense. Some clubs let payers choose to cover the fee; the policy should be stated on the payment page.

Payouts and Settlement

Processors rarely deposit each payment separately. They collect a day’s or week’s payments, subtract fees, refunds, and disputed charges (chargebacks), and deposit one net amount days later. Some hold a reserve or delay payouts for new accounts. As a result, a single bank deposit may cover dozens of payments across several events, and the bank statement alone cannot show what was sold.

Record Gross, Not Net

The IRS defines gross receipts as the total amounts received from all sources, without subtracting any costs or expenses, and it uses gross receiptsGross receiptsThe total amounts the club receives from all sources during its fiscal year, without subtracting any costs or expenses. Gross receipts decide which Form 990 the club files.All terms to decide which annual return a club files. Recording only the net payouts understates income and hides fees. A club whose processor volume pushes gross receipts past $50,000 may no longer qualify to file the Form 990-N postcard. See Which Form 990 a Booster Club Files.

Reconciling Processor Payouts

Each month, for each processor or app account:

1. Download the processor’s monthly activity report and payout report.
2. Confirm total gross sales by event or item match the club’s records (registration lists, orders, count sheets for card sales at events).
3. Record gross income by budget line, fees as an expense, and refunds and chargebacks separately.
4. Match each payout on the processor report to a deposit on the bank statement, by date and amount.
5. Confirm the processor’s ending balance (money collected but not yet paid out) and carry it as a balance in the treasurer’s report.
6. Confirm no transfers went anywhere other than the club’s bank account.
7. Give the processor report and reconciliationReconciliationMatching the club’s books to the bank statement each month: the bank balance, plus deposits in transit, minus outstanding checks, equals the book balance. Someone other than a check signer reviews it.All terms to the non-signer reviewer with the bank reconciliation.

Processor reconciliation template

Form 1099-K

Form 1099-K reports the gross payments a payment settlement entity processed for a payee during the calendar year. The rules for the 2025 and 2026 tax years:

• Payment apps and online marketplaces (third party settlement organizations, or TPSOs) file Form 1099-K only when gross payments to a payee exceed $20,000 and the number of transactions exceeds 200. The American Rescue Plan Act of 2021 had lowered this to $600 with no transaction count; the One, Big, Beautiful Bill Act (Public Law 119-21) retroactively reinstated the $20,000 and 200-transaction threshold, and the IRS confirmed it in Fact Sheet 2025-08 in October 2025.
• Payment card transactions have no threshold. A club that accepts credit or debit cards through a card processor can receive a Form 1099-K for any amount.
• States can set lower thresholds. A club may receive a form even below the federal threshold.

What the club does with the form:

1. Do not panic. The IRS states that the reporting threshold does not affect whether payments are taxable. Most booster club income is exempt for a 501(c)(3) organization (a charity exempt from federal income tax), but some income, such as certain advertising, can be taxable; see Unrelated Business Income Tax for Booster Clubs.
2. Reconcile the form to the books. Form 1099-K reports the gross amount without adjustment for fees, refunds, credits, or discounts, so it will not match payouts. It should match gross payments in the processor reconciliationsReconciliationMatching the club’s books to the bank statement each month: the bank balance, plus deposits in transit, minus outstanding checks, equals the book balance. Someone other than a check signer reviews it.All terms for the calendar year.
3. Use it in preparing the return. The Form 990-EZ instructions say an organization receiving a Form 1099-K should consider those amounts when reporting contributions and revenue, and should retain all Forms 1099-K with its records.
4. Correct errors at the source. If the form shows the wrong name or tax ID, or was issued to a volunteer for club activity, contact the issuer for a corrected form.

Note that Form 1099-K follows the calendar year, while many clubs use a July to June fiscal year; reconcile by calendar month to bridge the two.