The Internal Revenue Service (IRS) was set to install a new reporting requirement for customers receiving income from sources like Venmo, Paypal, Ebay, and Etsy with the 2022 filing season. The American Rescue Act passed earlier this year, required anyone earning more than $600 from these types of sources, to be issued a 1099-K totaling all of their sales for the year.
This requirement has been delayed. Users of thsee sites will not be receiving 1099-Ks to document their sales if they are under the existing threshold.
These forms are a common occurrence for any company processing credit card payments. Processors were required several years ago to provide these forms to entrepreneurs at the end of each year.
The IRS didn’t provide a reason for delaying the requirement.
Let me leave you with this…
It should be noted that whether you receive a 1099 or not, all income received is a reportable transaction when filing an income tax return. Not picking up income on your return is income tax evasion which is punishable by fines, forfeitures, and up to 12 months in the slammer.
If you’re one of those people who actually believe that it can’t happen to you, think again.
The only thing an auditor needs to do is to look at the account where the proceeds of your sales are being deposited. At that point, it’s nothing more than a matter of simple addition.
Maybe you’re one of those people who think that if the amount is small, it doesn’t matter. Maybe you think that unless it’s tens of thousands of dollars, you won’t have any real problems.
If that’s how you think, then think again.
Earlier in my career, I had taken on an audit representation job of a return that I hadn’t completed. It was an older couple in Aurora who owned a small neighborhood convenience store.
He was 67, she was 65, and the audit wasn’t going well, so they called me in. The auditor had been able to prove that they hadn’t reported a total of $1,700 on their income tax return, and the auditor was pushing for jail time.
That’s right. You read that correctly. The auditor was trying to put a couple past the age of retirement in prison for a year, because they hadn’t reported $1,700.
Please understand that the way IRS Auditors are promoted is based upon their audit results. If you get one who’s bucking for Archbishop, then they’ll do the same to you.
Luckily, the auditor’s manager was a person I’d dealt with before who owed me a favor, so the couple didn’t go to jail. But they got hit with every possible penalty and interest that the Service could throw at them.
If you don’t think it can happen to you, think again. Properly report your income and file your taxes on time. There’s no such thing as too small or inconsequential when it comes to reporting your income.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due DIligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.