1099-K + What You Need to Know + Former IRS

Posted on by Michael Sullivan Fresh Start Tax Expert


What is Form 1099-K?


Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report certain payment transactions.

You should get a 1099-K by the end of January if, in the prior calendar year, you received payments:

• from payment card transactions (e.g., debit, credit or stored-value cards)

• in settlement of third-party payment network transactions above the minimum reporting thresholds of

◦ gross payments that exceed $20,000, AND

◦ more than 200 such transactions

Collectively, all payment card transactions and all third-party payment network transactions (once the threshold amounts have been met) are referred to as reportable payments or transactions.

NOTE: The thresholds of greater than $20,000 and more than 200 transactions apply only to payments settled through a third-party network; there is no threshold for payment card transactions.

Did you receive a 1099-K?


If you received a 1099-K, use it to assist you to correctly file your income tax return. Also be sure to retain it for your records.

Remember, you must report all income you receive from your business on your tax return. In most cases, your business income will be in the form of cash, checks, and debit and credit card payments.

Therefore, you should consider the amounts shown on Form 1099-K along with all other amounts received when calculating gross receipts for your income tax return.

Refer to Publication 583, Starting a Business and Keeping Records, for more detailed information and assistance regarding proper record keeping.

Did you receive a letter related to 1099-K from the IRS?

You received one or more of these letters because you may have underreported your gross receipts. This is based on a comparison of your tax return and the Form(s) 1099-K furnished to you that shows an unusually high portion of receipts from 1099-K reportable transactions. It is very important that you respond to the IRS.

The current versions of the letters are reflected on the left side of this page and contain active links to each document. These are periodically updated.

Following are some tips to help you with the inquiry.

• Read the letter thoroughly and complete any worksheets.

• Gather your tax records, including the Forms 1099-K that you received, and determine if you agree with the letter about underreporting your gross receipts.

• Respond to the letter in a timely manner.

• If you have questions or need more time to respond, contact the person listed in the letter.

• If appropriate, consult your tax professional for assistance.


How is the IRS going to use this information?

The IRS uses the information reported from third parties to ensure individuals and businesses meet their tax obligations.

The IRS is integrating the new information supplied on the Form 1099-K into a variety of areas, including its compliance efforts, to ensure fairness and address non-compliance.

All 1099-K activities respect taxpayer rights and provide opportunities for taxpayers and tax practitioners to offer explanations or corrections if they receive a letter, a notice or audit.


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IRS Form 1099-K+ What you Should Know + Former IRS

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Understanding Your Form 1099-K   Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report certain payment transactions to improve voluntary tax compliance.   You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments: • from payment card transactions (e.g., debit, credit or stored-value cards), and/or • in settlement of third-party payment network transactions above the minimum reporting thresholds of – ◦ gross payments that exceed $20,000, AND ◦ more than 200 such transactions   What does my Form 1099-K report to me? A Form 1099-K includes the gross amount of all reportable payment transactions. You will receive a Form 1099-K from each payment settlement entity from which you received payments in settlement of reportable payment transactions. A reportable payment transaction is defined as a payment card transaction or a third party network transaction. • Payment card transaction means any transaction in which a payment card, or any account number or other identifying data associated with a payment card, is accepted as payment. • Third party … Continue reading

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1099 K Reporting Requirements + What you Need to Know + Former IRS

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  Form 1099 K Reporting Requirements for Payment Settlement Entities, just another way for big brother to keep up on us.   Beginning in January 2012, payment settlement entities (PSEs) are required by the Housing Assistance Tax Act of 2008 to report on Form 1099-K the following transactions: • All payments made in settlement of payment card transactions (e.g., credit card); • Payments in settlement of third party network transactions IF: ◦ Gross payments to a participating payee exceed $20,000; AND ◦ There are more than 200 transactions with the participating payee.   The IRS Verification Processes   We verify that tax returns are correct and complete using the following processes: • TIN Matching Program
Use the IRS Taxpayer Identification Number (TIN) Matching Program an Internet based pre-filing e-service, to ensure the Forms 1099-K you submit has the correct TIN. The program permits you to verify the TIN furnished by the taxpayer against IRS records prior to filing information returns. • Name Control
,The name control (a sequence of characters derived from a taxpayer’s name) and TIN on an electronically filed return must … Continue reading

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LatinoTaxPro.org + Feature Webinar Speaker Former IRS Agent Michael D. Sullivan

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  Live Webinar featuring Michael Sullivan, please registar by going to the LatinoTaxPro.org website. How to Settle with the IRS – Listen to a Former IRS Agent Former IRS Agent discusses IRS Audits and How IRS Works cases to those who owe back taxes Also, how to settle with the IRS. January 11th, 2017 * 12pm PT

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Signs of Identity Fraud

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  IRS, States, Industry Urge Taxpayers to Learn Signs of Identity Theft No matter how careful you are, identity thieves may be able to steal your personal information. If this happens, thieves try to turn that data quickly into cash by filing fraudulent tax returns. The IRS, state tax agencies and the nation’s tax industry ask for your help in their effort to combat identity theft and fraudulent returns. Working in partnership with you, we can make a difference. That’s why we launched a public awareness campaign called “Taxes. Security. Together.” We’ve also started a new series of security awareness tips that can help protect you from cybercriminals. Here are a few signs that you may be a victim of tax-related identity theft: 1. Your attempt to file your tax return electronically is rejected. You get a message saying a return with a duplicate Social Security number has been filed. First, check to make sure you did not transpose any numbers. Also, make sure one of your dependents, for example, your college-age child, did not file a tax return and … Continue reading

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How Long Should I Keep My Tax Records + Former Agent Answers

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    The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out. The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date. Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return. Period of Limitations that apply to income tax returns 1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you. 2. Keep records for … Continue reading

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Free Sample Letter For Late Contributions for IRA, Retirement Rollovers

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  Here is a free Sample letter you can use to avoid penalties!!! Reasons for Late Contribution: I intended to make the rollover within 60 days after receiving the distribution but was unable to do so for the following reason(s) (check all that apply): ___ An error was committed by the financial institution making the distribution or receiving the contribution. ___ The distribution was in the form of a check and the check was misplaced and never cashed. ___ The distribution was deposited into and remained in an account that I mistakenly thought was a retirement plan or IRA. ___ My principal residence was severely damaged. ___ One of my family members died. ___ I or one of my family members was seriously ill. ___ I was incarcerated. ___ Restrictions were imposed by a foreign country. ___ A postal error occurred. Name
City, State, ZIP Code
 Date: ______________________ -5- ___ The distribution was made on account of an IRS levy and the proceeds of the levy have been returned to me. ___ The party making the distribution delayed providing information that … Continue reading

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Tax Preparedness Series: How to Avoid a Refund Delay;

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    Tax Preparedness Series: How to Avoid a Refund Delay; This is the second in a series of reminders to help taxpayers prepare for the upcoming tax filing season. As tax filing season approaches, the Internal Revenue Service is reminding taxpayers about steps they can take now to ensure smooth processing of their 2016 tax return and avoid a delay in getting their tax refund next year. The IRS reminds taxpayers to be sure they have all the documents they need, such as W-2s and 1099s, before filing a tax return. You may also need a copy of your 2015 tax return to make it easier to fill out a 2016 tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income amount from a prior tax return to verify their identity. Learn more about how to verify your identity and electronically sign your tax return at Validating Your Electronically Filed Tax Return. The IRS will begin accepting and processing tax returns once the filing season begins. Under the Protecting … Continue reading

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Michael D. Sullivan + Former IRS Quoted on Donald Trump Audit

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    Thanks to Nixon, President Trump’s taxes will be audited automatically every year President-elect Donald Trump waves as he arrives at the Trump National Golf Club Bedminster clubhouse, Sunday, Nov. 20, 2016, in Bedminster, N.J. Carolyn Kaster AP By Kevin G. Hall and Greg Gordon khall@mcclatchydc.com WASHINGTON: When Donald Trump is sworn in as the nation’s 45th president, his complex business empire will immediately be subject to an audit by the Internal Revenue Service. Thanks to an obscure provision in the IRS manual, Trump and his vice president, Mike Pence, will each be under a mandatory audit annually. “The requirement for mandatory audits of the tax returns of the president and vice president dates back to the Watergate era in the 1970s,” the IRS said in a statement to McClatchy, noting that nonpartisan career employees adopted the requirement. “Since then, this provision has remained in place during both Republican and Democratic administrations as well as under IRS Commissioners appointed by both parties.” The little-known provision in the IRS manual spells out strict rules under which the returns are audited. … Continue reading

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Former IRS Agent, Teaching Instructor + Ask Me Question about IRS

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    Michael D. Sullivan    1-866-700-1040 Former IRS Agent & Teaching Instucting Michael D. Sullivan is one of the founders of Fresh Start Tax LLC. He had a distinguished career with the Internal Revenue Service for 10 years. As a veteran IRS Revenue Officer / Agent, he served as an Offer in Compromise Tax Specialist and Large Dollar Case Specialist. He also collaborated with the U.S. Attorney’s office on undercover operations. Michael received several awards for his work and dedication as a IRS Agent . During his tenure with the IRS, he was a Certified Tax Instructor who taught out of the Atlanta Regional IRS Training Offices. He also taught out of the local and district offices of the IRS. Mr. Sullivan trained many of the new IRS Agents. Michael has been in private practice for the last 34 years in the field of Taxpayer  Consultation for IRS Audit and Collection tax resolution issues. He often consults with corporations and individuals, which involves a wide range of tax issues. Michael has worked many large complex cases for high net worth … Continue reading

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