1099K Overreach Prevention Act Set To Dial Back Legislation Regarding Credit Card Reporting
Washington, D.C. – The National Association for the Self-Employed (NASE) announced its support of legislation introduced in the House and Senate that would help decrease a potential paperwork nightmare for the self-employed and micro-businesses (10 or fewer employees). The 1099-K Overreach Prevention Act, introduced by Senators John Thune (R-S.D.) and Maria Cantwell (D-Wash.) in the Senate and Representatives Aaron Schock (R-Ill.) and Bobby Schilling (R-Ill.) in the House, would repeal the 1099-K reporting requirement on credit and debit card transactions.
Starting next year, the IRS would require business owners to reconcile the amounts they collect via credit and debit cards with the aggregate gross receipts amount from Form 1099-Ks, a new form this year to be sent to all business taxpayers who accepted merchant cards for payments or who received payments through a third party network. In preparation of this new reporting requirement, the IRS amended the tax forms for business taxpayers, including Schedule C filers to include Lines 1a -1d. The paperwork impact of having to reconcile actual gross receipts with information provided from Form 1099-Ks would be enormous on the self-employed and micro-businesses and result in a potential negative audit environment.
“We are pleased that congressional leaders in the Senate and House have introduced bi-partisan legislation to correct IRS regulatory interpretation of credit card reporting requirements that burden the self-employed and micro-business community,” said Katie Vlietstra, NASE Director of Government Affairs. “The legislation introduced by Senators Thune and Cantwell in the Senate and Representatives Schock and Schilling in the House, would alleviate significant confusion related to basic accounting procedures that could inadvertently cause an increase in audits for America’s smallest businesses. The IRS took steps in the 2011 tax year to defer this requirement and we hope to see further concerns on this misguided regulation alleviated with successful passage of this legislation this year.”