PayPal-We have a vendor that we have been doing business with for quite some time and they are insisting that we make our payment via PayPal. They do not accept credit cards.

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PayPal provides payment confirmation documentation. The actual payment typically goes through a credit card, although it can also be debited from a bank account. The difficulty might be remittance information – how does the vendor know what you are paying them for? If the purchase is online and you are paying via PayPal, then the vendor knows what the payment is for. But if it's an AP situation where you are invoiced and then pay via PayPal, remittance information is potentially a problem. You have to send remittance information separately in an email or mail, stating what the payment is for and including details of the payment (amount, date, etc.).

From an IRS perspective, it would just be another payment method, so from a 1099-reporting standpoint, that the payment is made via PayPal is immaterial-if it's normally a reportable payment, then it is a reportable payment when made through PayPal.

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