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IRS to Track Online Sellers’ Payment Transactions Beginning Next Year

Posted By admin On March 17, 2010 @ 10:00 am In Money Watch | Comments Disabled

Barbara Weltman
AuctionBytes.com [1]
Wednesday, March 17, 2010

Internet sellers who don’t report their sales will no longer be under the radar. Starting next year, any bank or other payment settlement company that processes credit cards, debit cards, and electronic payments such as PayPal will have to issue information returns telling the IRS what merchants receive. The new returns are Form 1099-K, Merchant Card and Third-Party Payments.

IRS to Track Online Sellers Payment Transactions Beginning Next Year irs form 1099k

Purpose of Reporting

The IRS believes that many online sellers fail to report their transactions. Some don’t report because they mistakenly believe that Internet sales are invisible. Others do so because they are trying to evade taxes.

The IRS has found that using information returns, such as W-2 forms for employees, Form 1099-MISC for independent contractors, and Form 1099-INT for bank interest, goes a long way toward improving the reporting of income. IRS computers can match income reported on these information returns with the income reported on tax returns.

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IRS to Track Online Sellers Payment Transactions Beginning Next Year 040310banner3 [2]

Who’s Subject to Reporting

All merchants who accept payments through credit cards, debit cards, gift cards and PayPal will receive information returns telling them – and the IRS – the gross amount of the merchant card transactions. This will be broken down month by month. While the form uses the word “card,” the IRS has made it clear that this is interpreted broadly to include third-party network transactions (i.e., PayPal).

Exception: Very small merchants won’t be issued information returns. “Small” for this purpose means annual gross sales on merchant cards of no more than $20,000 or 200 or fewer transactions. In other words, reporting is required only if gross amounts for the year exceed $20,000 and there are more than 200 transactions.

Full story here. [1]


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URLs in this post:

[1] AuctionBytes.com: http://www.auctionbytes.com/cab/abu/y210/m03/abu0258/s03

[2] Image: http://purewaterfreedom.com/

[3] As Sweden Goes, So Goes the World: The Beginning of the End of Cash: http://www.prisonplanet.com/as-sweden-goes-so-goes-the-world-the-beginning-of-the-end-of-cash.html

[4] Department Of Homeland Security To Scan Payment Cards At Borders And Airports: http://www.prisonplanet.com/department-of-homeland-security-to-scan-payment-cards-at-borders-and-airports.html

[5] Argentine Tax Agents to Track All Credit Card Buys: http://www.prisonplanet.com/argentine-tax-agents-to-track-all-credit-card-buys-feature.html

[6] Large Cash Transactions Banned In Mexico: http://www.prisonplanet.com/large-cash-transactions-banned-in-mexico.html

[7] Gold Coin Sellers Angered by New Tax Law: http://www.prisonplanet.com/gold-coin-sellers-angered-by-new-tax-law.html

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