As I noted last week, the problem of entering 1099-K’s for recipients of those forms was deferred until 2012. It turns out that the IRS acquiesced to complaints from tax professional and other groups, including the Retail Industry Leaders Association (RILA). In a letter to the RILA, Steven Miller, Deputy Commissioner of the IRS stated,
This is to confirm what I stated in our recent meeting with your organization and other industry representatives. There will be no reconciliation [of Form 1099-K’s] required on the 2012 form, nor do we intend to require reconciliation in future years. Our intention is that the reporting of gross receipts and sales on the 2012 income tax forms will be modeled on the 2010 income tax forms. No other changes to these forms related to payment card reporting are contemplated.
So which recipients of Form 1099-K’s need to be concerned? Well, you do need to be reporting your credit card receipts on your tax returns. If you’re not, and you’re audited, you can be certain the IRS will look at the 1099-K’s and ask the obvious questions.
Overall, this is great news for everyone. The problems with reconciling accounting systems designed for multiple types of payments to tax forms would have given everyone involved gray hair. This is no longer a problem deferred: It’s one less needless complexity to deal with.
Hat Tip: RILA
Tags: 1099-K