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Merchants need to prepare for new 1099-K reporting standard this month

06/01/2012 - By Daniel Aitken

Merchants and card processors will have to file 1099-k forms.

Tag: Merchant Account

Several million small businesses in the U.S. will need to acquaint themselves with a new federal reporting standard by the end of this month - a process that is sure to cause temple-rubbing among companies already wary of compliance burdens.

By the end of January, payment processors will be obligated to distribute annual 1099-K forms to any small company that has more than $20,000 in gross sales or has 200 payments during a given year with any single credit card processing company.

In regards to compliance, the new law is intended to help the Internal Revenue Service match up tax filings with the sources of their revenue.

"This is really a verification step that the IRS is putting in place," Steven Aldrich, CEO of Outright.com, explained to The Street. "You might call it a paperwork burden that's being placed on the small business now because the government wants to ensure that they have the ability to verify the amount that the small businesses are earning."

This has become particularly problematic with the growth of electronic transactions and payment processing, Aldrich pointed out.

Articles written by ChargeNational.com's editorial team. For more information, click here.

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