The new payment card reporting rule is prompting revisions to the tax forms. For 2011, credit and debit card companies will begin to issue 1099-K forms on payments to merchants, and third-party networks such as PayPal will give 1099-Ks to payees with over 200 sales transactions and over $20,000 in annual sales volume.
These amounts will be reported on a separate line on Schedule C and Forms 1065, 1120 and 1120S. This way, the Service will be able to match the amounts shown on the 1099-K with what’s reported on a return, making discrepancies easier to spot. The IRS is hoping that this should reduce underreporting of gross receipts by sellers of goods and services.
