I recall in October of 2009, a friend who’d lately opened up a company of their own, requested me “How will the IRS understand how much I process in charge card transactions?” My short answer was “They don’t.” The lengthy response is, the IRS doesn’t keep an eye on charge card transactions how they do, say, independent contractor earnings (1099).
However, everything has altered somewhat recently. A couple of in the past, the government quietly passed a brand new regulation that could affect you like a merchant.
Included in section 6050W from the Housing Assistance Tax Act of 2008, gross transaction levels of payment card and third-party network transactions should be filed using the IRS by banks along with other merchant providers.
Under new section 6050W, any payment settlement entity making payment to some participating payee in settlement of reportable payment transactions must create a return for every twelve months to become filed using the Service, and furnish an announcement towards the participating payee, setting forth the gross quantity of such reportable payment transactions, along with the name, address, and citizen identification number (TIN) from the participating payees.
The machine works almost the same as 1099 reporting for independent contractors – ought to be fact, the shape the IRS drafted up for reporting is known as form 1099-K.
What do 1099 K reporting needs mean for you?
The Government reporting needs for retailers, which entered effect this year, are the following: if your charge card sales exceed $20,000, as well as your transactions exceed 200, then you will be sent a 1099-K from your credit card merchant account provider that shows the gross quantity of transactions that you simply processed for your year. That’s about this! As long as you’re honest in your tax statements, you’ve got nothing to bother with.
And don’t forget, anybody with under $20,000 in charge card sales, and under 200 transactions won’t get a 1099-K.