If you accept credit cards at your place of business, the Internal Revenue Service may have its eye on you.
According to CNNMoney, the IRS has sent letters to 20,000 small-business owners over the past year to verify that they’ve reported all of their cash earnings on their income taxes. Why? Some $140 billion in taxes go unpaid by small businesses every year, and Uncle Sam wants to collect. These letters are an attempt to do so.
Here’s the deal: Since January 2012, payment settlement entities have been required to report all credit card transactions to the IRS on Form 1099-K. These entities include credit card companies like Visa, MasterCard, and American Express, as well as online merchant processors. For example, PayPal files 1099-Ks for account holders who process more than $20,000 in goods and services sales and complete at least 200 transactions.
 
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