Posted by: Courtney Ockenden, CPA
Starting in January 2012, businesses that accept credit and debit cards when making sales to customers may receive a new IRS tax form 1099-K from their credit card processing companies. Form 1099-K, Merchant and Third Party Network Payments, will include gross reportable revenues, as well as a monthly breakdown of the processor’s transactions for the 2011 calendar year.
This new form was created as part of the Housing and Economic Recovery Act of 2008 to increase compliance in reporting sales income by merchants and as an on-going government effort to increase the collection of income tax. Because the IRS will also receive a copy of the Form 1099-Ks reported to you, it will aid the IRS in matching whether or not businesses are reporting correct revenue figures on their tax returns.
However, not every merchant will receive a form 1099-K; only those who generated either a minimum of 200 transactions or $20,000 or more in sales.
While you may begin to receive 2011 Form 1099-Ks in the mail, the IRS has deferred the requirement to separately report the merchant revenues on 2011 tax returns. This will however become a requirement starting with the 2012 tax returns.
For more information on the new Form 1099-K and how it relates to your tax return, feel free to contact Zinner & Co.
