IRS is now Collecting Revenue Data from your Credit Card Processor

Wed, 2011-01-05 19:39 — David Gendron

As of Jan 1, 2011 The IRS is now requiring your credit card processor, including PayPal and the like, to report to them how much money you're receiving by accepting credit card, etc. payments they've processed for your business. The figure the IRS asked for is the gross, unadjusted amount, so if you processed $100 in gross receipts, that's the number they are going to send to the IRS, even if you had a $20 chargeback and $15 in fees. At the end of the year the processor will send you a 1099 showing you the total dollar amount that you received through them and that they reported to the IRS. It's up to you to account for your business properly in the USA so that the IRS doesn't just assume that that's your total revenue (without taking into account your processors fees or chargebacks, etc), that you're not declaring properly, and that they are just going to take 28% directly from your processor, since they don't trust you. So be sure to declare your USA company's income properly, the IRS will be comparing your revenue to your gross receipts reported on the 1099: your revenue had better be equal to or larger than what's on that 1099 or you haven't been accounting for your business properly.

Also, don't forget you have to issue 1099's to any US person (excluding corporations at the moment) you paid more than $600 to in the calendar year, by the end of January, then get them to the IRS before the end of February, regardless of when your fiscal year end is. So if you're going to pay someone more than $600 be sure to get a W9 showing their SSN from them so you can complete the 1099's. It can be very hard to get people to give you their SSN after you pay them, so be sure to get it right away, before you pay them.

The good news is that we know Tax Pros that can help you through all this red tape. Just as us and we'll put you in touch.

Comments

Mon, 2011-04-18 00:49 — johndale

The Internal Revenue Service deadline for 2011

The Internal Revenue Service deadline for 2011 may be three days later than usual, however a lot of people nevertheless need extra time. Filing your taxes on time is essential. If you can't file or pay your taxes on time, then you need to contact the IRS as easily as possible. If you ignore the issue, then you'll only be making the situation worse.

Extending your filing deadline
If you will not be able to file your full tax return by the April 18 deadline, you need to file an extension. IRS Form 4868, properly filed, will extend the deadline for you to file to Oct. 17. Extending the filing deadline, however, does not extend the deadline for you to pay your taxes. Form 4868 requires you to make an estimation of how much tax you will owe and pay it at the time you file the extension. Failure to file an extension or a return will result in a 5 percent per month penalty, up to 25 percent of your total tax bill.

Extending your payment deadline
Your tax payment deadline is separate from your tax filing deadline. If you cannot pay your entire tax liability at the time you file, you should still file your taxes. That way, you can avoid paying both a failure to file and failure to pay penalty. You should pay as much as you can as quickly as possible. If you can, pay 90 percent or more of your tax liability when you file. This will cancel all penalties for six months, until the extended filing deadline. If you are filing on time but cannot pay, include what you can and wait the 30 to 45 days it will take for the IRS to send you a bill. Interest and penalties on unpaid balances compounds by 4 percent daily, so paying quickly is key. If you simply cannot pay, contact the IRS as soon as possible. You should call 1-800-829-1040 and discuss payment extension or installment options.