Q) Do businesses just SELF-REPORT their line-of-business to the CC agencies? Is fraud in that area really prevalent? Isn’t that how a lot of online casinos got in trouble?
A) When funds are processed by a merchant, all their sales are reported to the IRS and the CC processing companies issue a 1099 of the total funds collected on their account. Since the total funds collected are included in the merchants gross sales, it is now optional to enter the amount on the 1099K for 2012. Every merchant should consult with their tax professionals on the proper reporting of their credit card sales. I can’t speak to any research on the level of “fraud” on this topic…. not sure.
PDF Download: http://www.irs.gov/pub/irs-prior/i1099k–2012.pdf
