IRS -1099-K No Requirement For Businesses to Reconcile Gross Income and Third-Party Receipts
The Internal Revenue Service (IRS) has stated that it will not require businesses, either now or in the future, to reconcile their gross income with their third-party receipts as part of new 1099-K requirements.
The IRS previously announced that beginning in the 2011 filing year, businesses would be required to reconcile their reimbursement information (such as sales taxes, cash back and other non-income related dollars) from the gross receipts. There was concern on the part of retailers that this requirement would impose complex, unnecessary burdens, particularly on small-business owners.
On February 9, however, the IRS stated that "there will be no reconciliation required on the 2012 form, nor do we intend to require reconciliation going forward."
Thus, reporting of gross receipts and sales on the 2012 income tax forms will not include this onerous requirement, and will instead be modeled on the 2010 income tax forms. "No other changes to these forms related to payment card reporting are contemplated," the IRS said.
The Retail Industry Leaders Association (RILA) also welcomed the decision that the IRS will relieve retailers and business taxpayers in general from the new reporting requirements related to debit and credit-card receipts.
"We very pleased that the IRS took the time to listen and work with us to resolve this matter in a satisfactory manner," said Bill Hughes, senior vice president for government affairs for the Arlington, Va.-based retailer group. "This will relieve retailers of an unnecessary burden while still providing the IRS with the tools it needs to ensure tax compliance."
IRS Letter to Retail Industry Leaders Association
Comments above are from ASCPA Federal Tax Committee Chair:
Darren L. Neuschwander, CPA
Neuschwander, Faircloth & Hardy, P.C.
21908 Palmer Street
P.O. Box 1198
Robertsdale, AL 36567
P: 251.947.2479 | F: 251.947.2474