Convey Cautioning Businesses In Wake Of Latest 1099-K Changes
Convey Media Contact:
Nick Green, Convey Compliance Systems
MINNEAPOLIS – November 1, 2011 – Convey, a leading provider of tax information reporting services and software, is advising companies not to interpret Internal Revenue Service transitional relief for Form 1099-K reporting as a vacation from, or repeal of, the new tax law.
In 2008, Congress enacted “Section 6050W” – legislation that refers to reporting of payment card and third party network transactions. The legislation was passed to increase transparency in relation to electronic payments and transfers, and was forecast to raise $9.5 billion in extra revenue over 10 years.
The law and its side effects, such as more frequent requests for tax information forms, led to confusion amongst merchant banks and acquirers as well as merchants themselves. As a result of pleas from several trade associations representing both merchants and acquirers, the IRS announced plans not to assess penalties to those who make good faith efforts in 2012, the first year of the reporting process.
“The new IRS transitional relief is a reasonable step to ease into a big change for the payment industry,” said Troy Thibodeau, executive vice president, Convey. “Businesses who treat this opportunity as a tax reporting holiday – or think that this is signaling 1099-K reporting being repealed – will risk penalties.”
More than just immediate penalties, how businesses handle the transition in the long run will determine if they are recognized as a purveyor of best practices or a cautionary tale. Those who efficiently manage the process will create competitive advantages such as not having to pass along related costs to their customers.
“This is as if the payment industry was at the starting line of a marathon that was delayed,” said Thibodeau. “The elite competitors will continue training and, once the race starts, will blow by contenders on the way to their prize.”
Convey provides tax information reporting services and software to businesses to make IRS compliance clear and uncomplicated. With Convey’s flexible, scalable software and the guidance and focused experience of its service teams, Convey’s clients – from small companies to nearly half of the Fortune 500—can be assured that they’re complying with IRS regulations and reporting financial transactions efficiently and correctly. The taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. Convey reduces risk, improves bottom lines, and provides the clearest path to compliance. Learn more about Convey at: www.convey.com.