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IRS Reporting Rule For Credit Card Payments

To reduce underreporting of gross income, beginning in 2011, credit and debit card companies will begin to issue 1099-K forms for total payments to merchants. Companies such as PayPal will be required to issue 1099-K’s to payees with over 200 sales transactions and $20,000 in annual sales.  Also the IRS will be adjusting forms 1040 Sch C, 1065, 1120 and 1120S to require that the amount reported on the 1099-K will be separately stated in the income tax return.  The IRS hopes that these changes will make discrepancies and underreporting easier to spot.

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