Bill Aims to Simplify 1099-Ks for Small Biz

The IRS’ new 1099-K form is seen by some as so burdensome for small businesses, two lawmakers are pushing for a new federal law to scale it back. The 1099-K Overreach Protection Act would prohibit the IRS from fully implementing the 1099-K form , the website TheStreet.com reports. Rep. Aaron Schock, R-Ill., introduced the bill in the House on Feb. 1; Sen. John Thune, R-S.D., is set to propose a similar bill in the Senate. 1099-K forms are meant to give the IRS a better way to keep track of e-commerce transactions, and to make sure merchants’ numbers are correct. But critics say it’s confusing and unnecessary. Form 1099-K is only required for merchants with at least $20,000 in annual revenue and at least 200 transactions in a calendar year, the website EcommerceBytes.com reports. Banks, credit-card companies, and other third-party payment processors must submit 1099-Ks to these merchants, detailing their monthly transactions. Merchants are supposed to reconcile those numbers with what’s reported on their taxes. One concern: “No one quite knows what will happen if the numbers don’t match,” the head of a tax-accounting software firm told EcommerceBytes. In fact, there could be legitimate reasons for a discrepancy, critics say, such as: Fraud by a customer, Returns in which a customer got cash back, and Collecting deposits as part of a rental business. Perhaps adding to the confusion: The IRS has deferred the requirement for reporting 1099-K amounts on business tax-return forms this year. So even though your business return has a new line for entering amounts from 1099-Ks, the IRS says to enter “0” on that line for your 2011 taxes only . (1099-K amounts should instead be reported on the line for all gross receipts for 2011, according to the IRS.) Form 1099-K is set for full implementation next year, but the 1099-K Overreach Protection Act may stop it in its tracks. Until then, it may be wise to consult a tax attorney to make sure your small business tax return is correct. Related Resources: Clarification to the Instructions for Schedule C, E, & F (Form 1040) on Reporting Form 1099-K Amounts (Internal Revenue Service) Schock, Schilling introduce legislation in House (East Peoria Times-Courier) Small Business Tax Information FAQ (FindLaw) Browse Tax Lawyers by Location (FindLaw)

Excerpt from:
Bill Aims to Simplify 1099-Ks for Small Biz

ATTORNEY ADVERTISEMENT:  This communication or portions thereof may be considered "advertising" as defined by Section 6157(c) of the California Business and Professions Code or within the jurisdiction in which you are viewing this.  Nothing in the discussion above is intended to be a representation or guarantee about the outcome of any legal proceeding in which you may be involved.  By providing the information above in this format, Michel & Associates is not soliciting you to hire it to handle a specific legal matter you may currently have or be anticipating commencing in the future.  Notwithstanding the discussion above, you should not act or refrain from acting on the basis of any content on this site without seeking appropriate legal advice regarding your particular circumstances from an attorney licensed to practice law.  This communication is informational only and does not create an attorney-client relationship between you and Michel & Associates.  Michel & Associates's attorneys are licensed to practice in California, Texas, and the District of Columbia.