Making it a little harder for small businesses, the Internal Revenue Service has issued proposed regulations, starting with transactions in calendar year 2011, when the gross amount of payment card and third-party network transactions is to be reported annually by the credit card and 3rd party providers to the IRS.
Of special note, is that this also includes payments from 3rd party networks, such as PayPal and actually goes beyond credit card transactions. PayPal will now be required to notify the IRS whenever I sell an item on EBay and get paid with PayPal.
This is viewed as totally separate from the 1099′s that you would currently receive if you were a service provider e.g. it’s now possible that you could receive TWO 1099′s for the same service. If my business paid you $1000 to repair my truck, and put it on my credit card, I am required to issue you a 1099-MISC. In ADDITION, my credit card processor is also required to issue you a 1099-K for all credit card payments that you have received.
We also anticipate there will be a new line when reporting your income on your tax returns whereby you will need to separate cash payments from credit card or 3rd party payments.
So, if you’ve been ignoring your PayPal transactions when it comes time to prepare your tax return, it may be time to think again.
Steven A. Feinberg – www.AppletreeBusiness.com – Get Appletree Blog via Email!
Filed under: Uncategorized Tagged: | 1099, 1099k, credit card, paypal
