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1099-K rules become slightly less insane

February 10, 2012

The IRS has finally realized what has been obvious to everyone else: it would be insane to require businesses to reconcile their gross receipts to the 1099-Ks issued by credit card companies. Imagine a grocery chain -- let alone somebody like Walmart -- trying to tie out their gross receipts to their 1099-Ks.

The real use of the 1099-Ks will be to identify people in the eBay/Amazon economy who aren't reporting their income, though it will probably also help to smoke out, say, restaurant owners or gas station operators who are cooking their books. Even then it will be a crude tool to identify egregious violators -- not a way to to tie out income precisely. The idea of tying out gross receipts with 1099-Ks like you tile out an individual's interest income to their 1099-INTs never made any sense.

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Russ Fox

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