1099 K – Credit Card Sales Report to IRS
In an effort to help close the "tax gap," the IRS has launched a new compliance program targeting the underreporting of income by business taxpayers that receive Form 1099-K information returns from credit card companies and third-party transaction networks. If your business receives a Form 1099-K because it accepts payment cards from customers, you may receive IRS letters and notices for underreported gross receipts.
Starting in 2011, Form 1099-K reports the gross amount of reportable transactions for the calendar year. Listed on the forms will be the names, addresses and taxpayer identification numbers of merchants and others accepting credit cards, debit cards, stored value (gift) cards and other third-party payments. The purpose of the new requirement is to create a paper trail so that the IRS can compare a merchant's card transactions with income reported on the merchant's tax return.
This is not the typical IRS matching program since the amount on the 1099-K will not be a direct match to what is reported on a taxpayer's return. The IRS will be using the information from the 1099-K along with information on the tax return.
Mon, December 10, 2012