From NATP New Round of Examinations

[Kram BergGold]

Form 1099-K Letters to Businesses

"Beginning next week, the IRS will be sending out approximately 20,000 letters to small businesses questioning the possible underreporting of income. The IRS matched the information reported on 2011 Form 1099-K that was sent to the business to the income the business reported on its tax return.

We understand that there will be three different letters:

1. Soft touch/inquiry
2. Correspondence audit, possibly questioning the underreporting of income
3. CP2000

The letters have not been released for review; however, we were notified of the IRS’ plans to mail these letters during a conference"

[S T]

Kram - I am wondering if this "new round" of inquiries to be released , is due to the fact that maybe some of these "Business" - Sched C or otherwise, just did not report all of their revenue.

Even with the caveat that we did not have to report 1099K info on 2011 tax returns, I found several of my clients (want to think it was an honest oversight or omission) as it was only a few thousand as in $ 1K - 2K - did not provide me maybe some Sales Figures , so I adjusted accordingly.

I believe, we already knew that IRS was going to use the 1099K as a tool for what they might believe is under-reported or un-reported income.

No matter how it is approached - it is going to be a bookkeeping/accounting effort. 20,000 letters isn't bad, I just hope some of my clients are not among the receiving end of the letter.

Thanks for the "heads up"

Sandy