Trade Groups Back Tax-reporting Relief

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Trade Groups Back Tax-reporting Relief


The National Grocers Association (NGA) and the Retail Industry Leaders Association (RILA) are cheering measures that should relieve grocers and other businesses from burdensome tax-reporting requirements.

H.R. 3877, the 1099-K Overreach Prevention Act, was introduced in the House of Representatives by Aaron Schock (R-IL) and Bobby Schilling (R-IL), with companion legislation introduced in the U.S. Senate on Feb. 9, 2012, by Sens. John Thune (R-SD) and Maria Cantwell (D-WA). The same day, the Internal Revenue Service (IRS) itself decided against the requirements.

The agency said previously that starting in the 2011 filing year, businesses would be required to reconcile reimbursement information, such as cashback, sales taxes, state and local deposits, and other non-income-related dollars from the gross receipts. Last October, the IRS delayed implementation of the new requirement until 2012, and in a Feb. 9 letter to RILA, the agency confirmed that it wouldn’t require the information to be separately reported.

According to the IRS letter to RILA: “There will be no reconciliation required on the 2012 form, nor do we intend to require reconciliation going forward. Our intention is that the reporting of gross receipts and sales on the 2012 income tax forms will be modeled on the 2010 income tax forms.” The Arlington-based trade organization had raised concerns about the complexity of complying with the regulations, in addition to the relevance of the resulting number, in a December 2011 letter to the agency.

“This will relieve retailers of an unnecessary burden while still providing the IRS with the tools it needs to ensure tax compliance,” said RILA SVP for Government Affairs Bill Hughes of the decision.

If left unchecked the IRS’ requirement would have required businesses that accept electronic payments such as credit cards, debit cards, or electronic benefit transfer (EBT) to reconcile their income with the gross amount of electronic reimbursements as reported to the IRS by their third-party or other electronic payments processors, according to NGA

“The IRS’ proposed requirements [would have forced] independent grocers and other business owners to spend more time compiling unnecessary paperwork and less time on the critical issues which affect their businesses viability,” such as “growing their businesses and creating jobs,” Peter J. Larkin, president and CEO of Arlington-based NGA, pointed out.

In the past, NGA has taken issue with the IRS over verification requirements for the law. In October 2011, the group requested a one-year delay in the implementation of the 28 percent backup withholding requirements for failure to match or verify a merchant’s Tax Identification Number (TIN) with their corporate name. The IRS granted the delay request to allow merchants and third-party processors to continue the process to verify information without fear of being penalized.