A client showed me a letter from the IRS concerning all businesses that accept credit/debit cards must report back to the IRS their gross card usage.starting 01-01-2011. What is this all about? What is the IRS trying to do?
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Credit Cards
The credit card processors will report the total amount that each business does to IRS.The individual business just must make sure their total sales match want has been reported. -
credit cards
Does the merchant have to report back to the IRS on a monthly or quarterly basis?Comment
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1099-k
The draft form of the 1099-k which is sent to the IRS has 12 boxes for month-by-month dollar figures.
I have a client who is a big e-Bay seller and receives a significant portion of his payments through Paypal and I warned him when I did his 2010 return of the upcoming reporting requirements. I think he keeps good records and is honest so it should not be a problem for him . However, I expect there are quite a few eBay sellers whose receipts never see an income tax form! I think that this is the type of business that this requirement is meant to affect...and that is okay with me. I pay my fair share of taxes and don't look with favor upon those with "under the table" income!Comment
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It is my understanding that the Schedule C will have income breakdown for 1099K, 1099MISC, and other income.
If all numbers are being computer processed for matching, as with the new Schedule D and Form 8949, I see headaches with more CP2000 letters.Comment
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Going to have to change the reporting of Sales for restaurants - sales tax and (especially) tips are included in credit card receipts. I normally account for sales taxes by using Sales Tax Payable and don't include it in the Revenue.Comment
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