Form 1099-K is an information return that reports payment card and third party network transactions. Previous reports along with speculation supported that the IRS may conduct specific matching of Forms 1099-K to business returns in 2012. If the business income reported on a tax return, would be less than the amount reported on the form 1099-K for 2012, the taxpayer would receive correspondence from the Internal Revenue Service indicating this. This would inevitably increase IRS audits.
There is good news (for now), however.
On Feb. 9, 2012, former IRS deputy commissioner for services and enforcement, Steven T. Miller, stated to the National Federation of Independent Business that the IRS does not plan to require businesses to separately report Forms 1099-K on business returns for 2012 or in future years. The IRS plans to revert to 2010 reporting requirements for income. As a result, the IRS will not be able to specifically track Forms 1099-K to business returns. The IRS will have to use its current means of questioning returns that have probable unreported income based on industry norms.
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