IRS: No worries about the 1099K
In a definitive answer to questions about 1099K reporting requirements, which relates to debit and credit card receipts, the IRS has said it will not require retailers and businesses to separately reconcile reimbursement information, such as cash back, sales taxes, state and local deposits, and other non-income related dollars from the gross receipts.
The IRS letter came in response to an inquiry from the Retail Industry Leaders Association (RILA), an Arlington, Va., trade group.
Last October, the IRS delayed implementation of the new requirement until 2012.
According to the IRS letter, “There will be no reconciliation required on the 2012 form, nor do we intend to require reconciliation going forward. Our intention is that the reporting of gross receipts and sales on the 2012 income tax forms will be modeled on the 2010 income tax forms.”
RILA raised concerns about the complexity of complying with the regulations as well as the relevance of the resulting number in a December 2011 letter to the IRS.
“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 VP government affairs. “This will relieve retailers of an unnecessary burden while still providing the IRS with the tools it needs to ensure tax compliance.”