Business Credit Card Sales Will Now Be Reported to the IRS by Credit Card Processors.
The IRS is looking for ways to close the tax gap (the amount of tax that should be paid compared to the amount of tax that is actually paid). The annual tax gap is roughly $340 billion per year.
To help the IRS locate more unreported income, Congress passed a law requiring credit card processing companies to report to the IRS the amount of credit card sales its customers receive. The law takes effect this year. In other words, if your business accepts credit cards, your credit card processor will report your credit card sales to the IRS (in early 2012 you will receive a Form 1099-K showing 2011 credit card sales).
The Form 1099-K will report your total credit card sales for the year, as well as monthly credit card sales. A draft copy of the form can be viewed here.
The State of Michigan may also have some interest in viewing the monthly and total sales on these forms to make sure that all sales are being reported for sales tax purposes.
Buzzkill Disclaimer: This post contains general tax information that may or may not apply in your specific tax situation. Please consult a tax professional before relying on any information contained in this post.
Any tax advice contained in the body of this post was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Any information contained in this post does not fall under the guidelines of IRS Circular 230.