If you accept credit cards from your customers in your business - this is important information for you.
Starting from this year - 2011 - IRS requires all credit card processing companies - that is the merchant institution - such as banks or other institutions - to issue 1099 K to their customers.
This new form 1099 K will report to the customer and to IRS the amount of money that the business received as payment from customers during the year.
This is a major change. The revenue reported by you on your Tax Return should reconcile - NOT necessary match - but reconcile with the amount reported by the credit card company.
So, if the credit card processing company reports to IRS that you received $100,000 from your customers through credit card and if you report $120,000 as your total annual revenue - you better have good records to prove that you received only $20,000 in other forms of payment (cash or check).
Another radical example would be when you report on your tax return that your revenue was $80,000 - you should have good reconciliation in your records to prove that of the $100,000 received from credit cards only a part was revenue and the remaining was for something else.
So, be careful with your financial statements and tax returns for 2011 - particularly if you are accepting credit cards from your customers - new reporting - requires - new care.
1099 K is real for 2011. Check it out.
