If you process credit cards you are.  The IRS is debuting its newest income tracking form when credit cards payments are made to your business, the 1099K.  What does this mean for you?  More paperwork and making sure that your credit card income matches what you receive from your merchant processors.  What happens if you don't?  An valid explanation you need to have should you get audited.  With the increased hiring of IRS auditors and the audit percentages going up, it's going to make it harder and harder to escape making sure that your financial records are compliant with the IRS.

An intereseting twist though as reported by Ed Keator, Jr., a tax preparer from New York on LinkedIn, who attended a recent IRS seminar.  He notes in his entry "Per the IRS agent that was there here is the situation. If I pay vendors with checks and credit cards.....only the amounts paid with the checks would be reported to the vendors on the 1099 that I am required to file if the threshold was meant. My 1099's should not include the amounts that were paid with credit cards because those are being reported to them on the new 1099-K forms and the IRS does not want duplicate reporting."

Thankfully Intuit is working on correcting this problem right now in QuickBooks, however those who aren't keeping track of everything properly could encounter problems and add more layers of issues.  It's not going to get better by any means, so just make sure that you're prepared as best as possible and not try to avoid the situation.

Dwayne J. Briscoe / QuickBooks Financial Educator