Online Business Owners Prepare for the 1099-K
Posted 01-17-2012 at 06:57 AM by kristinecpa
I've mentioned the new 1099 reporting requirements a couple of times already, but now that it's tax season, and the new IRS Form 1099-K is going to make its debut, it's a good time to review the new 1099 rules.
First, some background on the new 1099 reporting rules...
A few years ago the Housing Assistance Tax Act of 2008 was passed as part of the Housing and Economic Recovery Act of 2008. While the main purpose of this bill was to provide much needed housing reform, there were other purposes included in the bill, such as the need to improve voluntary tax compliance by business taxpayers, more specifically, online business taxpayers.
The IRS realizes that there are millions of dollars in tax revenues that are lost due to unreported transactions (known as the Tax Gap). The majority of these unreported transactions are believed to be online transactions. The purpose of this bill is to try to reduce the tax gap by forcing credit card processors and third party settlement organization to report certain transactions to the IRS.
In plain English, the IRS wants credit card and third party payment processors such as PayPal, eBay and Amazon, to report transactions made by their customers. This means that if you accept credit card payments for goods or services that you sell, or if you use PayPal or another third party to accept credit card payments for goods or services that you sell, you could get a 1099-K this year.
Continue reading "Online Business Owners Prepare for the 1099-K"...
First, some background on the new 1099 reporting rules...
A few years ago the Housing Assistance Tax Act of 2008 was passed as part of the Housing and Economic Recovery Act of 2008. While the main purpose of this bill was to provide much needed housing reform, there were other purposes included in the bill, such as the need to improve voluntary tax compliance by business taxpayers, more specifically, online business taxpayers.
The IRS realizes that there are millions of dollars in tax revenues that are lost due to unreported transactions (known as the Tax Gap). The majority of these unreported transactions are believed to be online transactions. The purpose of this bill is to try to reduce the tax gap by forcing credit card processors and third party settlement organization to report certain transactions to the IRS.
In plain English, the IRS wants credit card and third party payment processors such as PayPal, eBay and Amazon, to report transactions made by their customers. This means that if you accept credit card payments for goods or services that you sell, or if you use PayPal or another third party to accept credit card payments for goods or services that you sell, you could get a 1099-K this year.
Continue reading "Online Business Owners Prepare for the 1099-K"...
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