1099K Tax Fee
This year, credit card processing companies as well as third-party network payments such as PayPal, Amazon.com and Google are required to report to merchants and to the Internal Revenue Service the gross amount of the transactions they've processed. This is due to the federal Housing Assistance Tax Act of 2008 which included the enactment of Section 6050W of the Internal Revenue Code. This federal regulation will be used to help the IRS identify under-reported payment made to merchants by credit and debit card.
The credit card processor is required to monitor your processing volume during the year and submit to the IRS the 1099-K that includes your gross sales for the year as well as a breakdown for each month. Many processors are charging a fee for this, we have seen anywhere from $4.95-$20.00 per month to $100.00 or more annually! Many processors are calling this a Regulatory Fee as the IRS made it illegal to charge directly for the 1099-K.
Your processor is required to send to you a 1099-K form by February, 15th and report your gross processing volume to the IRS by February, 28th.
What do you need to do?
The IRS requires that you report your gross credit card sales and net processed for tax collection purposes. Reconciling your gross sales (which is the figure reported to the IRS) to net sales (the net amount funded to your account) may be difficult. This site and our knowledgeable staff are here to help.
We also need you to verify that we have your correct TIN (Tax Identification Number) and Legal Name for your business in our file through one of the following methods:
- Reviewing your tax records (including your SS-4, IRS peel-off tax label, various tax returns)
- Verify information with your accountant or tax advisor
- Contact the IRS directly at 1-800-829-3676 and request Form 147-C
Then call us to verify the data we are placing on your 1099-K is accurate.
NPC has created a program called R.A.A.P. or the Regulatory Accounting Assistance Program to make 1099-K reporting a breeze. It reports your gross and net processing volume, the two major components to complete your 1099-K form. Determining the gross vs net volume can be an accounting challenge for many merchants and their tax preparers, for example, if you issue refunds, returns or have had any chargebacks, the gross amount reported on your 1099-K will differ from the net volume deposited to you. The design of our Regulatory Accounting Assistance Program is to simplify the process of completing your 1099-K form and ensure you don’t make any mistakes. Mistakes can result in an IRS audit or possibly withholdings of 28% of your future credit card processing volume.
R.A.A.P. Program Features
- Update data on your W-9
- Name, business name, address, TIN – Taxpayer Identification Number
- 1099-K Gross to Net Reconciliation Report
- Offers Gross sales and Net ‘Profit’ from including deductions and expenses
- Detail of reported amounts
- Actual figures reported to the IRS (NO MISTAKES!)
- Details amounts by card type, explains any differences and traces them to the statement
- Final 1099-K
- Access previous 1099-K reports for three prior years
- Allow access to the site for your tax preparer