Credit and debit card issuers will soon be required to report to the IRS the annual dollar figure collected by their business merchants. The provision was included as part of a new housing law to provide assistance to homeowners facing foreclosure.
The new information-gathering tool is meant to ensure tax compliance. It will become effective with 2011 calendar year receipts. The credit/debit report will be issued in the January for the previous calendar year transactions and will likely be similar to the Form 1099. The credit/debit companies will send a copy of the report to the business as well, allowing the company to reconcile the taxpayer’s records with the information report (as is done with Form 1099).
Businesses with less than $20,000 in processed receipts and 200 or fewer transactions are exempt from the reporting law.
For additional information, contact Stuart Gosswein at stuartg@sema.org.