The IRS Ripped off Its Shirt to Reveal Green Flesh Atop Muscles Made of 1099-Ks
Yes, it’s true. The IRS has recently become the green-fleshed Hulk of our governmental body. This year the IRS has been on a roll changing things to improve the system, prevent fraud, smash identity theft, and, in the writer’s opinion, get it’s act together before facilitating the facilitation of the individual mandate come 2014. Really, it makes sense. Sometimes you have to make a mess in order to reorganize and clean a mess. Gamma-radiation, or reality, found its way into the veins of the IRS, and moves are being made.
The NATP reported that the IRS will be sending out around 20,000 letters to small businesses who take credit/debit cards. Until recently, there was no specific reporting requirement for third party network receipts. The inclusion of these funds was dependent on the taxpayer to honestly report them in gross receipts. Now, there is not only a separate line for these amounts, but there will be a verification and supposition process for the IRS to postulate and match how much said taxpayer/business “should” have netted with regards to the amount reported on the 1099-K.
There are several tiers of letters going out ranging from a simple “please review this” to “send me (IRS) proof.” Interestingly enough, the IRS cannot propose specific adjustments to the return because it can’t match Forms 1099-K directly to line items on 2011 business returns. However, the IRS is contacting taxpayers when it thinks that there is a discrepancy. The IRS determines this probability based on the taxpayer’s line of business and a perceived disproportionate share of credit/debit card and third-party network payments reported on Forms 1099-K, compared with gross receipts from other sources reported on the tax return.
The IRS is finally taking more control and making it harder to “work the system,” and all I can do is quote it’s likeness: The Hulk.
- I’m changing .. but I musn’t change – I musn’t — Yes, I must! HULK MUST LIVE – –
Posted: December 7, 2012 by Joseph Rogers