New IRS reporting for credit card processing
Posted by: Curtis Stevens on February 22nd, 2010

1099-k-formI have been in the credit card processing business since 2003. I have always wondered why the IRS never required processors to report the processing volume of its merchants. Well,that has all changed thanks to the IRS sneaking a requirement in the housing assistance tax act that was passed in 2008.  Starting next year, your credit card processor will be required to report your gross processing volume.  The new form will be called a 1099-k.  The IRS will only see your gross volume.  Any deductions like chargebacks and refunds will need to be deducted and is your responsibility.

My question is what will the processing industry do?  Will a lot of big ISOs start charging the merchants a new fee to help cover their cost to handle this new reporting requirement?  Only time will tell, but I hope not.  I do not know the logistic of it and how easy it will be.  I am sure however if there is significant cost, many processors will create a new fee and past on the expense. So if you have been trying to get away by not reporting all of your gross sales, that day is coming to an end.

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