New IRS Reporting Requirements

Jan. 7, 2011 - PRLog -- The new IRS reporting requirements have come into full swing in this new year.  A brief description of the new requirements includes that all merchants’ gross credit card, debit card and third party transactions will be tracked.  Of those merchants who sell more than $20,000 worth of goods and perform more than 200 electronic transactions annually will have to report these sales to the IRS.

Starting January 1, 2011 all merchants will have their gross sales and transactions tracked and a 1099-K form (a report of various types of income other than wages, salaries, and tips, opposed to the W-2 form) will be submitted to the IRS in early 2012 for the 2011 calendar year.  These merchants, who gross more than $20,000 and conduct more than 200 electronic transactions, will then have to report this income on their business tax returns.

Why now? The Housing Assistance Tax Act of 2008 incorporated the enactment of new Section 6050W of the Internal Revenue Code, which requires reporting entities to report payment card transactions and third party network transactions to IRS for each calendar year beginning January 1, 2011.  The purpose is to promote accurate tax filing.

So who is responsible for this reporting? We, as the merchant services provider, have opted to take the responsibility from the merchants and our merchants will not have to hold on to their transaction receipts for these purposes.  We suggest that merchants hold on to their receipts for those reasons, such as for bookkeeping purposes.  However, for the purpose of IRS reporting we already keep track processing of our merchants’, so we will just use those records.   Therefore, the merchant services provider will provide the 1099-K form to the merchant, and all the merchant will have to do is include that 1099 form on their business tax return of the appropriate year.

As this information may be new to some, please let us know if you have any further questions on this topic.   http://www.fgmsusa.com

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First Global Merchant Services is an electronic payment provider. We are a registered tier 1 merchant service provider with Visa and MasterCard which allows us to offer our clients the most competitive pricing while providing ongoing customer support.