A recent letter from the IRS to the National Federation of Independent Business (NFIB) indicates a change in the IRS’s position regarding an element of the payment reporting requirements from the enactment of Section 6050W of the Internal Revenue Code in 2008.
In that letter, the IRS indicated that it will not require businesses to reconcile their payment records with the numbers reported by their payment services entities on the new 1099-K reporting form.
However, it does not eliminate the requirement for the reporting entities to report payments in settlement of payment card and third party network transactions to the IRS for each calendar year beginning January 1, 2011 for all merchants. Obligated reporting entities, including First Data, must still create and mail 1099-K’s.
Merchants seeking additional information should contact their tax advisor, and review the First Data Payments Compliance Alert #1202030.
A PDF file including the full text of the IRS letter to the NFIB is available on the NFIB website.