Recently, merchant credit card processing companies created a new form for merchants, known as the 1099-K, at the request of the first Internal Revenue Service (IRS).
After an extensive planning process, the IRS required that merchants' annual transactions be documented on this new form for third party and merchant card payments.
About the 1099-K The new 1099-K was implemented by the IRS as a way to ensure all credit card merchant accounts and transactions are documented and reported for tax purposes.
With these new 1099-K forms, the IRS is able to compare a year of debit and credit card sales from a specific business to the reported sales during tax return season.
Specific Information 1.
Legal Name & TIN It's required for each merchant credit card processing company to file a 1099-K for each business specifically based on legal name and Tax Identification Number (TIN).
The 1099-K includes transactions for every merchant account link to a business.
If businesses switch to a new merchant service provider within one year, 1099-K forms will need to be filled out and returned for each provider.
2.
Reports Gross Sales These new forms report gross sales for credit card merchant accounts.
Certain deductions, like credits, fees and chargebacks could be beneficial for tax returns - although they may not be represented on the actual 1099-K form.
3.
Small merchant credit card processing Reporting is required for all businesses, included those with less than $20,000 in sales.
However, there are certain exceptions.
For example, third-party merchants using PayPal are exempt if they have fewer than 200 transactions or less than $20,000 in sales.
Recently, the 1099-K forms have been going through changes, creating a much more relaxed tax season for merchants.
Let's take a look at a recent piece of news about the IRS forms.
IRS Relaxes 1099-K Treatment Gone are the days when merchants are required to report the exact merchant credit card processing volume on their form.
This is great news as merchants will no longer have to worry about tentative discrepancies in their forms and the documentation held by the IRS.
This is because the IRS released new guidelines that basically directed merchants to ignore the line asking for "Merchant card and third party payments.
" Now, businesses are instead asked to place a zero on that line and submit all income on the "Gross receipts or sales" line, regardless of how it was received.
One questions remains.
Why would the IRS decide to make this change? It's possible that the IRS has come to terms with the complexity of the 1099-K form.
In fact, one of the largest payment processors requested an extension, as they needed more time to get the mandatory form out to their merchants.
This last minute decision to relax the guidelines of the form will most likely reduce the stress levels it had previously put on business owners and tax accountants everywhere.
After an extensive planning process, the IRS required that merchants' annual transactions be documented on this new form for third party and merchant card payments.
About the 1099-K The new 1099-K was implemented by the IRS as a way to ensure all credit card merchant accounts and transactions are documented and reported for tax purposes.
With these new 1099-K forms, the IRS is able to compare a year of debit and credit card sales from a specific business to the reported sales during tax return season.
Specific Information 1.
Legal Name & TIN It's required for each merchant credit card processing company to file a 1099-K for each business specifically based on legal name and Tax Identification Number (TIN).
The 1099-K includes transactions for every merchant account link to a business.
If businesses switch to a new merchant service provider within one year, 1099-K forms will need to be filled out and returned for each provider.
2.
Reports Gross Sales These new forms report gross sales for credit card merchant accounts.
Certain deductions, like credits, fees and chargebacks could be beneficial for tax returns - although they may not be represented on the actual 1099-K form.
3.
Small merchant credit card processing Reporting is required for all businesses, included those with less than $20,000 in sales.
However, there are certain exceptions.
For example, third-party merchants using PayPal are exempt if they have fewer than 200 transactions or less than $20,000 in sales.
Recently, the 1099-K forms have been going through changes, creating a much more relaxed tax season for merchants.
Let's take a look at a recent piece of news about the IRS forms.
IRS Relaxes 1099-K Treatment Gone are the days when merchants are required to report the exact merchant credit card processing volume on their form.
This is great news as merchants will no longer have to worry about tentative discrepancies in their forms and the documentation held by the IRS.
This is because the IRS released new guidelines that basically directed merchants to ignore the line asking for "Merchant card and third party payments.
" Now, businesses are instead asked to place a zero on that line and submit all income on the "Gross receipts or sales" line, regardless of how it was received.
One questions remains.
Why would the IRS decide to make this change? It's possible that the IRS has come to terms with the complexity of the 1099-K form.
In fact, one of the largest payment processors requested an extension, as they needed more time to get the mandatory form out to their merchants.
This last minute decision to relax the guidelines of the form will most likely reduce the stress levels it had previously put on business owners and tax accountants everywhere.