New IRS Credit Card Payment Reporting Looms - Other News

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » New IRS Credit Card Payment Reporting Looms

New IRS Credit Card Payment Reporting Looms

Add to Favorites:
New IRS Credit Card Payment Reporting Looms

Beginning with the 2012 tax filing season, there will be a new form that taxpayers and merchants have to be concerned with—the 1099-K for Merchant Card and Third Party Networks.

Filling out and submitting form 1099-K to the IRS will be necessary for anyone who engaged in “reportable payment transactions.” What a reportable payment transaction is, in a nutshell, is a transaction in which a gift card or credit card is used and accepted as payment for any transaction settled via a third party payment network. PayPal is an example of one of these networks.

This is in accordance with a law that was designed to close the “tax gap,” the bulk of which is believed to be as a result of online transactions. The main motivation driving the creation of the law was to “improve voluntary tax compliance by business taxpayers and help the IRS determine whether their tax returns are correct and complete.” The law was actually passed back in 2008. However, the reporting requirement portion of the law did not take effect until this year.

“It was actually something that we were following back under the Bush administration under the 2008 budget—we started to see these kinds of rumblings about the ‘tax gap’ and whether or not businesses were paying their fair share,”

According to money.cnn.com, Tom Henschke, president of the Pennsylvania-based SMC Business Councils, explained that his group was following the progress of this change during the Bush administration, when they started to hear the phrase ‘tax gap’ coming up a great deal, along with the questions of whether businesses were paying the right amount of tax. He thinks the responsibility for the new rules falls on both that and the current administration.

The “tax gap” is what exists between the amount of income that business and individuals technically owe to the IRS and what is actually paid. According to estimates made by the federal government, they lose around $300 billion each year due to income that is going unreported.

Also according to money.cnn.com, IRS Commissioner Doug Shulman said last year, when his agency unveiled the 1099-K, that better reporting of information would help the system of taxation work better, and ensure that everyone put in what they should. He praised the new law for giving the government an important way to close this ‘tax gap,’ and to give businesses improved records in order to carry out proper accounting of what they owe, and in order to better know their expenses and income.

The new form is likely to cause great confusion, come tax time.

Add to Favorites:

Related News:

Debt Could Put a Damper on Romance

Posted: August 18, 2017

Does credit health factor into romance? The answer is yes, according to the new Chase Slate 2017 Credit Outlook survey. Carrying a lot of debt could be a deal breaker for some people, with 37% saying that it could make them think less of a ... Continue reading
Voting for Discover it Student Card Design

Posted: August 17, 2017

Discover is asking college students to weigh in on the new design for their Discover it Student Card, so from now until September 21, they can vote on their favorite design on Discover's website. To get the word out, they are running a ... Continue reading
Bank of America and PayPal Strike a Deal

Posted: August 16, 2017

With more and more people interested in making mobile and digital payments, Bank of America and PayPal have inked a new deal paving the way for Bank of America customers to be able to link their credit and debit cards with PayPal and use ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Match Mile For Mile: We’ll match all the Miles you’ve earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
You could turn $150 into $300 with Cashback Match™. Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
For Excellent, Good Credit
No Annual Fee. See WebBank/Fingerhut Credit Account Terms.
For Bad Credit