Free Site Registration


IRS Won’t Require Reconciling 1099-K Reports on Credit Card Payments with Gross Receipts

Print
Email
Reprints
Washington, D.C. (February 10, 2012)

By Michael Cohn, Accounting Today

The Internal Revenue Service has informed a small business advocacy group that it will not require businesses to reconcile their gross receipts with the merchant card transactions reported on the new 1099-K information reporting form.

In a letter Thursday to Susan Eckerly, senior vice president of public policy at the National Federation of Independent Business, IRS deputy commissioner for services and enforcement Steven T. Miller, wrote that no reconciliation would be required on 2012 business tax forms such as the 1120 nor in future years. The IRS had earlier said only that no reconciliation would be required on 2011 income tax returns.

“Thank you for your January 18, 2012, letter concerning proposals that Forms 1120 and other business income tax forms require a reconciliation of gross receipts and merchant card transactions,” he wrote. “As you know, we announced in October that no reconciliation is required on the 2011 income tax returns. In your letter, you raised whether we would require reconciliation for future years and outlined potential business impacts if we pursued such reconciliation.

“This is to confirm what I stated in our recent meeting with your organization and other industry representatives,” Miller added. “There will be no reconciliation required on the 2012 form, nor do we intend to require reconciliation in future years. Our intention is that the reporting of gross receipts and sales on the 2012 income tax forms will be modeled on the 2010 income tax forms. No other changes to these forms related to payment card reporting are contemplated.”

The Housing and Economic Recovery Act of 2008 requires the IRS to begin collecting a 1099-K this year from third-party payment entities, such as credit card companies, for merchant card transactions, such as credit and debit card payments. The 1099-K will show all credit transactions within a merchant’s business for the previous year if they exceed either $20,000 or 200 transactions for the calendar year.

A pair of lawmakers, Rep. Aaron Schock, R-Ill., and Bobby Schilling, R-Ill., recently introduced legislation in Congress to prohibit Congress from implementing the new tax-reporting requirement for small businesses to reconcile their 1099-K reports from outside providers such as credit card companies with their own internal records (see Lawmakers Introduce Bill to Limit 1099-K ‘Overreach’).

The IRS decision appears to address the lawmakers’ concerns, as well as those of the NFIB. The NFIB and other business advocates won a similar victory last year when Congress repealed the expanded 1099-MISC reporting requirements in the Affordable Care Act and the Small Business Jobs Act that would have required businesses to report their transactions with other vendors if they exceeded $600 per calendar year (see President Signs 1099 Repeal into Law).

3 Comments

It is good that we are not required to reconcile the 1099-K forms because it can be difficult for small businesses because the 1099-K includes meal tips, and taxes. There should be a way for the credit card companies to segregate these items so only income is shown on the 1099-K.

Posted by: Vincent C | February 14, 2012 8:27 AM

Report this Comment


Tell that to the IRS auditor when they come knotting at the door.

Posted by: valtom | February 13, 2012 10:42 AM

Report this Comment


And the moon is made of Green Cheese

Posted by: RL | February 13, 2012 9:38 AM

Report this Comment

Add Your Comments...

Already Registered?

If you have already registered to Accounting Today, please use the form below to login. When completed you will immeditely be directed to post a comment.

 

Follow Accounting Today
Advertisement
Advertisement

Women in Accounting: Where are the Leading Ladies?

May 17, 2013

Marcum’s Nanette Lee Miller and Janis Cowhey McDonagh sat down with managing editor Tamika Cody to discuss some of the obstacles women in the accounting profession face when trying to make their way into leadership positions.

IMA’s Jeff Thomson on the Role and Skills of Management Accountants

May 8, 2013

Institute of Management Accountants president and CEO Jeffrey Thomson discusses why accounting students should consider management accounting as a career, and the IMA's partnership with John Wiley & Sons.

Breaking out of Molds to Get Ahead

May 6, 2013

ConvergenceCoaching partner Jennifer Wilson talks with Accounting Today senior editor Danielle Lee about how female accountants can position themselves better for a promotion at their firms.

Advertisement

SLIDE SHOW

Top 10 Tech Initiatives -- 2013

May 5, 2013

The AICPA's annual list of IT priorities for accounting firms.

Tax Stats: May 2013

April 30, 2013

Our monthly collection of statistics from the world of tax.

10 Biggest Estate Planning Mistakes

April 29, 2013

Help your clients avoid these common pitfalls.

Common E-mail Security Mistakes

April 23, 2013

These five bad habits can make your confidential information -- and that of your clients -- easy to steal.

The Art of the Tax Cartoon

April 9, 2013

A selection of tax cartoons from Philly tax firm Drucker & Scaccetti's 'Finding Humor in Taxes' exhibit.

Advertisement
Advertisement
Advertisement