IRS provides more relief for merchant tax reporting
February 22, 2012 - 09:14:13
Category: All
As the IRS peels back the onion on the controversial Merchant Tax Reporting mandate that became effective in 2011, they continue to provide reporting relief to the merchant community. At the end of 2011 the IRS instructed merchants to simply enter zero on the tax form line associated with the gross sales from credit/debit card receipts. So although payment processors are still required to prepare and submit the new 1099-k forms for the 2011 tax year, merchants are not required to report those amounts on their 2011 tax returns.
This directive provided temporary relief for 2011 reporting, but most merchants recognized the real compliance burden will be associated with reconciling their business sales with the amounts reported on the 1099-k forms in future years. The IRS has received numerous comments from merchants and industry associations regarding the hassle of attempting to reconcile the gross sales reported on the 1099-k with all of the adjustments necessary to account for net sales on tax forms - i.e. sales taxes collected, customer returns or chargebacks, tips, gift card sales, alternative payments, etc.
Responding to these concerns and the numerous inconsistencies in the reporting requirements, the IRS has now announced that merchants will not be required to reconcile the amounts reported on their 1099-k. This change is effective for 2012 reporting and all subsequent years.
As a result of this new ruling, merchants will report the 1099-k amount as a line item entry on their 2012 tax reporting, but will not be required to complete the onerous task of reconciling the gross receipts listed on the 1099-k to the sales and revenue amounts listed on their Form 1120 (or other tax forms).
Let us know your experience with the new 1099-k reporting of credit/debit sales, and the impact it has on your tax preparation.
Posted by: Dennis
Free Webinar: Trustwave 2012 Global Security Threats & Trends
February 08, 2012 - 10:14:09
Category: All
By Doug
On 2/9 at 10:00am CST, Trustwave, Wind River Financial's PCI compliance partner vendor will be hosting a free webinar on their 2012 Global Security Threats & Trends Report. If you are interested in up-to-date trends on how hackers are getting into computer networks, this webinar may be for you. It will be presented by Nicholas Percoco, Trustwave's head of SpiderLabs advanced forensic group.
Register for the webinar here.
Posted by: By Doug
1099-K form in your mailbox very soon!
January 31, 2012 - 13:21:30
Category: For Merchants
By: Bonnie Kruckenberg
Update on 1099-K Reporting Information
Why did we send our clients a 1099-K?
Those who make payments in settlement of merchant card transactions and third party payment network transactions are required to report those payments to the IRS. 2011 is the first year reporting is required.
What is reported on the 1099-K form?
The gross amount of reportable transactions is reported to the Internal Revenue Service (IRS). Gross means the total dollar amount of aggregate transactions without regard to any credits, charge-backs, fees, cash equivalents, discounts, refunds or any other amounts. The amounts are reported by month and in total.
Where is the information reported?
The information is reported to the IRS, and you the client should receive a copy of the 1099-K filed by us by January 31.
Why is the reporting necessary?
It is required by law. Third-party information has been shown to increase voluntary tax compliance, improve collections and assessments within the IRS.
How does this impact clients like me?
The impact to you could range anywhere from a major headache to a non-event. For 2011 IRS business tax forms include a line for merchant card and third party payments. Essentially, 1099-K recipients will need to reconcile the “gross” amount reported to them to the actual sale amount. This could be very difficult to reconcile. For example, the gross amount of the transaction may include sales tax that was paid as part of the transaction. However, sales tax is not income to the business; it is just a pass-thru that is paid to the state. This is just one example; others include refunds, discounts, tips, etc.
Is there any good news?
Yes, it appears there is a one year reprieve given by the IRS:
"For 2011, you are not required to report income received via merchant card or third party network players, so enter zero on line 1a and report all income, regardless of how it was received, on line 1b."
So what should I do now?
Consult your tax advisor and begin planning for 2012.
If you would like to share this post with some one here is the link:
Posted by: Bonnie
Alert: Source Code for pcAnywhere Compromised
January 30, 2012 - 12:18:12
Category: All
By Doug
PcAnywhere is a popular off-the-shelf remote access software package that allows personnel or vendors to access a business computer network remotely for various reasons. Semantec, the developer of pcAnywhere has announced that the source code for pcAnywhere is believed to have been compromised in 2006 during a breach to their network. A well known hacking group has recently claimed that they have the source code which may allow them to develop exploits which could potentially allow them to access the networks of businesses that use pcAnywhere.
Visa's Global Cyber Security Leader has indicated that "Visa highly recommends pcAnywhere and other unnecessary ports be disabled from the firewall to prevent POS systems from being compromised." In addition, Semantec has provided a whitepaper regarding the source code compromise with recommendations to mitigate risk. It is available here. Please also note that PCI DSS requires that ports used for remote access be closed when not actively in use.
If your business uses pcAnywhere, your computer network may be vulnerable to being hacked. Therefore, it is important that this information be forwarded to technical personnel, whether internal or external, so that appropriate assessment and action can be taken to secure your business network. Small businesses that do not have internal IT resources may wish to forward this information to the entity that installed your network.
Posted by: By Doug
Inside Visa: Preventing Card Fraud
January 19, 2012 - 08:28:36
Category: All
By Doug
Here is an ABC News video on Visa's state-of-the-art data center and the security that goes into the first line of defense against fraud. As one part of the payment card transaction process worldwide, about 8000 Visa transactions are flowing through Visa's systems per second.
Posted by: By Doug
