Accounting News

Wednesday, February 8, 2012
1099-K Overreach Prevention Act

The Housing and Economic Recovery Act of 2008 mandated the distribution of 1099-Ks from third party payment entities. The primary one being credit card processors. So if you have gotten calls from clients about a new tax form they are unfamiliar with that may be the source.

That is as far as the Act went. The IRS has taken it further and is requiring businesses to reconcile the reports with internal records. The difficulty is the 1099-K does not include refunds or credits that would make the reconciliation much less difficult.

But before it goes into effect there is a legislative push to remove this burden on businesses. Representatives Aaron Schock and Bobby Schilling of Illinois have introduced the 1099-K Overreach Prevention Act to congress to that end. The bill is still young and it is unclear what support it has but Senator John Thune of South Dakota plans to introduce a similar bill to the senate.

The reporting requirements on business are only growing every year. This is sometimes the IRS but can also be state or local laws that increase regulation. It is impossible for the average small business owner to navigate all the paperwork alone. A small business accountant is a great source for information and help to reduce any future legal threats.

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