What New Notices Related To Form 1099K Mean
What do I do with the Form 1099K?
Form 1099K is an information return that reports payment card and third party network transaction. You should retain it for your records and use it to assist you in completing your tax return. Refer to IRS Publication 583, Starting a Business and Keeping Records.
Remember, the information reported on the 1099K should already be reflected in your income tax return as part of your total gross receipts, which are a combination of both payment card receipts and other forms of payment like cash and checks.
What do I do if I receive a notice related to Form 1099K?
You received one or more of these letters and notices because you may have underreported your gross receipts. This is based on your tax return and Form(s) 1099K, Payment/Merchant Cards and Third Party Network Transactions that show an unusually high portion of receipts from card payments and other Form 1099K reportable transactions. It is very important that you respond to the IRS.
Here are some tips to help you in addressing the inquiry:
- Read the notice thoroughly and complete any worksheets.
- Gather your tax records including the 1099Ks that you have received and determine if you agree with the notice about the underreporting of gross receipts.
- If you have question, use the contact information provided on the notice.
- If appropriate, consult your tax professional for assistance.
How is the IRS going to use this information?
IRS uses the information reported from third parties to ensure individuals and businesses meet their tax olcigaionts. The IRS is integrating the new information supplied on the Form 1099K into a variety of areas, including its compliance efforts, to ensure fairness and address non-compliance.
All 1099K activities respect taxpayer rights and provide opportunities for taxpayers and tax practitioners to offer explanations or corrections if they received a notice or audit related to this effort.
Want to know more about the Form 1099K?
Go to http://www.irs.gov/Tax-Professionals/Third-Party-Reporting-Information-Center, which provides information on who should file these forms; when they need to be filed; and how to get help. Or you can contact your ShindelRock tax professional for assistance.