IRS Provides Limited Penalty Relief for Form 1099-K Filings

Sept. 12, 2013

Companies that process payment card and third-party network transactions are required to report the gross amount of such transactions to their customers and to the IRS on Form 1099-K, “Payment Card and Third Party Network Transactions.” Forms 1099-K submitted with incorrect or invalid information, such as an incorrect or missing payee taxpayer identification number (TIN), are subject to penalties. In 2011, the IRS provided transitional relief from penalties for taxpayers who made a good faith effort to file their Forms 1099-K in a timely manner. Notice 2013-56 extends this relief to Forms 1099-K filed in 2013 and 2014.

Taxpayers who filed 2012 Forms 1099-K in 2013 qualified for penalty relief if the forms had missing TINs, obviously incorrect TINs, or incorrect name and TIN combinations. Taxpayers filing Forms 1099-K for 2013 due in 2014 will qualify for relief only for forms filed with incorrect name and TIN combinations and will not be entitled to penalty relief for missing or obviously incorrect TINs. Companies subject to 1099-K reporting should begin reviewing their files to obtain missing TINs and identify obviously incorrect TINs.
 
 

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