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Subject:  IRS Letter Charge Sales Date:  8/15/2013  12:25 AM
Author:  Jeanwa Number:  119003 of 130192

You all probably knew this was coming, I didn't. Have you seen anyone that has received a letter?

If you (generic you) are reporting all your sales, I don't see a problem.

The controversial new letter, bearing the heading of "Notification of Possible Income Underreporting," asks recipients to review their last year's tax return to confirm that all of their income was accurately reported. Recipients were selected based on information that the IRS has begun to collect about credit card and debit card transactions. To this point, the IRS acknowledges that it has sent approximately 20,000 letters to employers around the country.

The IRS is aiming to crack down on businesses that have reported a disproportionate share of receipts from card transactions in the belief they have may have omitted cash transactions, which are more difficult to trace and often go unreported. A form attached to the letter requires recipients to explain why the portion of gross receipts resulting from non-card payments appears unusually low for their type of business. It warns that a failure to respond to the request may result in detrimental action...

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.

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