The Internal Revenue Service (IRS) has posted a Frequently Asked Question (FAQ) on Form 1099-K and reconciliation, and will not require reconciliation of gross receipts and merchant card transactions on business tax returns going forward.
On Feb. 10, the IRS amended its informational webpage on credit card reporting requirements to announce that the IRS will not require reconciliation of gross receipts and merchant card transactions on Forms 1120, "U.S. Corporate Income Tax Return," and other business income tax forms. The Housing Assistance Tax Act of 2008 requires credit card companies to report merchants’ annual gross credit, debit, and third party network payment card transactions to the IRS using Form 1099-K. The National Small Business Association (NSBA), Arizona Small Business Association (ASBA), and other small business groups had expressed concern about the burdens and costs associated with reconciling discrepancies between their own sales records and the Forms 1099-K issued by credit card processors. The Feb. 10th IRS announcement directly addresses these small business concerns.