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Tag Archive for 1099-K

Checklist For Tax Practitioners – Look At The IRS Sharing Economy Tax Center

Annette Nellen

In September, the IRS created a Sharing Economy Tax Center with links to tax information to help freelancers and those renting property. This center offers general information primarily to help individuals understand related tax matters. But it’s not enough for practitioners, as it doesn’t cover all possible tax issues (such as state and local ones) or provide links to relevant law provisions.

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TIGTA Report Concludes That IRS’s Lax Enforcement Is Costing $9 Billion

Ron Marini

The Treasury Inspector General for Tax Administration (TIGTA) issued a report concluding that the IRS’s lax enforcement of backup withholding requirements is potentially causing billions of dollars in lost revenue (TIGTA Rep’t No. 2016-40-078).

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Attacking Small Businesses that Receive Too Much in Credit Cards – IRS Letter 5043

Attempt to get “Cash” businesses

The IRS has been pushing for many years to capture cash income of small businesses and force him to pay taxes. That is one of the reasons that the IRS is requiring credit card merchant service companies to report a 1099-K for businesses to the IRS. This form lists the amount of credit card payments made to the business by its customers. The IRS then takes this information, comparing it to the gross sales of the business. If the business has too high of a percentage of credit card sales, the IRS issues a letter 5043.

This letter starts out that “your gross receipts may be underreported.” This is the beginning of a long series of letters and correspondence which could eventually lead Read more

1099-K Notices Bewilder Taxpayers – To Match or Not to Match?

TaxConnections Blog PostDo you have tax clients who run small businesses or decided to sell their household items on e-bay this past year? Or perhaps you are a CPA who accepts credit card payments from your clients? If so, you may have already received a notice from the IRS or should be aware of the latest updates on the IRS push for information matching with Form 1099-Ks (Payment Card and Third Party Network Transactions). Some AICPA members have received 1099-K mismatch notices assessing thousands of dollars in penalties.

Less than a year ago, the AICPA raised the topic in a blog post about a major initiative that requires merchant card companies to report gross receipts on Form 1099-K. At the time, the IRS was carrying out a compliance program that sent notices to small business taxpayers to match their sales information with merchant provided Form 1099-K reports. The program was used to ensure business taxpayers were reporting adequate income from their credit card receipts. A driving force behind this decision was the growing US tax gap, as IRS data indicated that a major source for the gap was related to underreporting of business income on individual tax returns.

As a result, many taxpayers, especially self-employed Schedule C filers, are beginning to receive notices related to Form 1099-Ks. In these notices, the IRS is providing basic instructions such as “Read the notice thoroughly and complete any Read more