There were several little wrinkles that were part of the new Housing Assistance Act of 2008 that was signed into law by President Bush this week. One of them was that eBay and other on-line merchants and others accepting credit cards will have some reporting to keep up with.
Merchant banks will now report to the IRS (and you) the gross receipts for the year. This will cover credit cards, debit cards, and other third-party payments.
There are two silver linings to the new law. First, banks do not need to start tracking the deposits until January 1, 2011. Second, businesses with less than 200 transactions and sales of less than $20,000 will not have to be reported. Don't expect the merchant bank to not report though.
Unfortunately, there are several pitfalls here. The bank reports will not show credits and refunds, but they will definitely need to be taken into account when reporting to the IRS. You will also have bank fees, merchant costs, etc. All of these will go against income as well.
In the end, the IRS will be able to check and audit those eBay and other on-line merchants that have gone unchecked for years with ease once this goes into effect. There will be some growing pains here for those merchants, but at least it is a few years away.
Merchant banks will now report to the IRS (and you) the gross receipts for the year. This will cover credit cards, debit cards, and other third-party payments.
There are two silver linings to the new law. First, banks do not need to start tracking the deposits until January 1, 2011. Second, businesses with less than 200 transactions and sales of less than $20,000 will not have to be reported. Don't expect the merchant bank to not report though.
Unfortunately, there are several pitfalls here. The bank reports will not show credits and refunds, but they will definitely need to be taken into account when reporting to the IRS. You will also have bank fees, merchant costs, etc. All of these will go against income as well.
In the end, the IRS will be able to check and audit those eBay and other on-line merchants that have gone unchecked for years with ease once this goes into effect. There will be some growing pains here for those merchants, but at least it is a few years away.
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