Skip Page Banner  
Skip Navigation

Casual Merchants Increasingly Likely to Get Underreporting Notices

Wednesday, February 20, 2013
Small business taxpayers whose gross receipts, as reported by credit card companies and third-party networks, appear to exceed the income stated on their tax returns may soon be receiving notices from the Internal Revenue Service about the discrepancy, practitioners tell BNA. IRS recently indicated it would begin sending “soft letters” of inquiry to taxpayers whose Form(s) 1099-K show an unusually high portion of receipts from credit card payments and other reportable transactions. For most businesses, Form 1099-K “is a non-issue,” Russell Fox, an independent enrolled agent based in Las Vegas, tells BNA. But for taxpayers who have not been reporting their income from occasional sales, “there's probably a ton of low-hanging fruit” for IRS to pick, Fox says.

To view additional stories from Daily Tax Report register for a free trial now