That collective sigh of relief that you just heard? It was an exhale from the Retail Industry Leaders Association (RILA), the trade association of the world’s largest and most innovative retail companies, who received guidance from the IRS advising that reporting requirements would not be as complicated as feared.
The letter to RILA, dated February 9, 2012 (downloads as a pdf), said in part:
This is to confirm what I stated in our recent meeting with your organization and other industry representatives. There will be no reconciliation required on the 2012 form, nor do we intend to require reconciliation going forward. Our intention is that the reporting of gross receipts and sales on the 2012 income tax forms will be modeled on the 2010 income tax forms. No other changes to these forms related to payment card reporting are contemplated.
The letter is referring to concerns expressed by small businesses that they would be required to separately state and reconcile transactions which were not actually income but were included in gross receipts. This would include such items as cash back, sales taxes, and deposits.
Concerns over how best to report and reconcile items on the form 1099-K have plagued retailers and individuals alike since legislation was passed by Congress in 2008 requiring the issuance of forms 1099-K for third party merchant and credit card payment processing which meets certain criteria. Since the law was passed, the Internal Revenue Service (IRS) has issued additional guidance and relief, including transitional relief, in an effort to stem growing anxiety over complying with the new law.
I’m sure that more fretting, more letters and more guidance is yet to come as the forms 1099-K roll out this year. I’ll update you as information becomes available.
(Hat tip: RILA)
