There’s a new 1099 reporting form that looks like it may have a big impact by capturing unreported income earned by small businesses., Form 1099-K, Merchant Card and Third Party Network Payments. The form is the result of compliance reporting requirements for some credit card and PayPal payments. By requiring compliance reporting by credit card companies and the like, the IRS is positioned to capture a lot more income earned by small businesses online that may now be slipping by as unreported. Business owners will receive a 1099-K at the end of the year notifying them what the service providers are disclosing to the IRS. Who will be impacted by this? It is hard to say until we start to see how the IRS handles implementation and enforcement. Also it looks like there is a de minimus exception if for the calendar year:
- The gross amount of total reportable payment transactions exceeds $20,000, and
- The total number of such transactions exceeds 200.
Find the draft form here.
Find the current instructions here.