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  Gabriela Bryant December 7, 2012 at 8:54pm

  This is what I found regarding Section 6050W. According to this, the $20,000 and 200 transactions minimum does not apply to credit card transactions?

  http://www.irs.gov/pub/irs-utl/irdm_section_6050w_faqs_7_23_11.pdf

   

  "What is the de minimis standard for reporting? Does it apply to payment card transactions?

  The de minimis standard exempts the reporting of transactions settled by a third party settlement organization of a payee in a third party payment network if the aggregate payments to the payee do not exceed $20,000 or if the aggregate number of transactions does not exceed 200. This applies only to the payments settled by third-party settlement organizations. The de minimis standard does not apply to payment card transactions."
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  Gabriela Bryant December 7, 2012 at 8:30pm

  Thank you so much for all this information Jim!
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  Jim Parker December 7, 2012 at 7:57pm

  Sorry, I was thinking about the other looming issue from last year: the requirement that all businesses needed to provide 1099-Ks to any vendor that provided over $600 in goods or services. That was repealed.

  Merchant accounts, though, are governed under Section 6050W, so all merchant systems are required to report gross sales over $20,000 and 200 transactions. You must meet both thresholds to trigger the report.

  Here's the Paypal statement on IRS 6050W.

  That's a separate ruling from the 1099 reporting that was repealed. At least that saves you bookkeeping hassles. You don't have to report purchases from your vendors on 1099Ks. That was repealed last year. That would have been a huge hardship for most artists.
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  Gabriela Bryant December 7, 2012 at 5:29pm

  I am sorry, Jim, I am a bit lost. Third party companies, like Propay, Paypal, Square, etc, will still be sending the IRS a list of all of our gross sales, right? I just want to make sure I have every single credit card sale transaction recorded, I wouldn't want the IRS come after me! :)
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  Jim Parker December 7, 2012 at 5:22pm

  I believe the tax reporting issue as it relates to furnishing 1099s to your materials and supplies vendors is a dead dog.

  This from accountingweb.com

  Under the Affordable Care Act of 2010 (ACA) – the controversial health care legislation – a business was required to provide 1099s for payments to corporations, beginning in 2012. The health care law also imposed these extended reporting rules on payments for goods.

   

  These onerous requirements faced strong opposition from the business sector and the tax community. Ultimately, the extended requirements were repealed by the Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011. So there are new no reporting requirements for businesses in 2012. It's as if this provision of the health care law never existed.
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  Gabriela Bryant December 7, 2012 at 2:10pm

  Does anyone know of any news regarding this subject?
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  Jim Parker April 28, 2012 at 11:00am

  The merchant accounts won't report your sakes tax separately on the 1099. You'll have to separate income and sales tax yourself.
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  Shawn Malone April 25, 2012 at 3:57pm

  Jim- just to confirm, you are saying the credit card statements include sales tax collected, as in there is just one total reported, and that is the total charge, sales tax lumped in that total charge.  In order for the state tax to be separated out of the total credit card transaction, the burden would fall on us to enter an additional tax amount during the total transaction to get it into a reported figure with our merchant service, yes? At this point, my merchant does not require me to do this, I just input a the total transaction for each charge.  Am curious what other merchants are requiring. Sometimes there is a prompt with certain business credit cards to input tax, but this doesn't seem to be consistent or a requirement at this point for all cards.
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  Jim Parker April 4, 2012 at 11:22pm

  The headache will be separating out the sales taxes for the various states and municipalities. You'll be required to report the 1099-K income in a separate field on your Schedule C. Since you normally don't have to report gross income (including sales tax), the 1099-K figures will throw a monkey wrench into the reporting. The credit card statements include sales tax collected. Not sure how the IRS is planning to deal with it yet. Intuit supposedly has a page about it, but right now it's pretty useless. I'm sure we'll figure it out by next tax season.
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  David Bjurstrom April 4, 2012 at 12:26pm

  Well, it doesn't seem that there is any additional reporting needed by we merchants at this point. It's all about the processor sending the form to the IRS (much like companies do who now send you and the IRS a 1099-MISC if they pay you over whatever the threshold is--used to be $600 and I think still is as I received one for a $1000 freelance job I did in 2011).
  The bottom line is that what you report as sales/income had better total at least what is being reported to the IRS on the 1099-K and if you keep accurate books, this shouldn't be an issue.