IRS Agrees with NFIB Regarding 1099-K Reporting Requirements, Responds by Eliminating Small-Business Compliance

Date: February 09, 2012

Contact: Jennifer Cooper, (202) 406-4425 or

IRS Agrees with NFIB Regarding 1099-K Reporting Requirements, Responds by Eliminating Small-Business Compliance

WASHINGTON, D.C., February 9, 2012 — Today the Internal Revenue Service (IRS) responded to a letter sent by the National Federation of Independent Business (NFIB) that outlined the paperwork burden that the new “third-party payer” reporting requirements, or 1099-Ks, would have on small-business owners.  In its response to NFIB’s letter and following a meeting that NFIB had with stakeholders at the IRS, the IRS has decided not to move forward with requiring businesses that utilize “third-party payers” to reconcile their gross receipts with those reported by the “third-party payers” on their tax returns. 

“This is a small, but important victory for small business and we appreciate the IRS working to alleviate the concerns of small-business owners on this issue,” said Dan Danner, CEO of the National Federation of Independent Business. “The many complications in our country’s tax code often put the small-business owner at a disadvantage with government compliance.  For this reason, NFIB fought so hard to have this provision eliminated and we count this as a small, but important step in the direction of simplifying the tax code overall.  While NFIB was able to achieve this victory by working directly with the IRS, we were also closely working with the offices of Senators Thune and Cantwell and Congressmen Schock and Schilling to permanently remove this requirement.  The legislation that has been introduced in each chamber will ensure that should the IRS choose to invoke this provision in the future, small businesses will remain protected from complying with this nuisance paperwork provision.”

The full text of the letter sent by NFIB to the IRS can be viewed here.

The full text of the IRS response to NFIB can be viewed here.

Starting in tax year 2012, small-business owners would have been required to take an onerous and unnecessary step on their annual income tax returns to comply with the merchant-card and third-party reporting law.  Section 6050W of the Internal Revenue Code, added by Section 3091 of the Housing and Economic Recovery Act of 2008, requires information returns (Form 1099-K) to be made regarding annual gross receipts reimbursements to settle merchant-card transactions.  Recently, the IRS added a Line 1a-e on business tax returns requiring business taxpayers to reconcile their actual gross receipts with the aggregate gross receipts amounts from Form 1099-K.  As announced in its letter to NFIB, the IRS will not be moving forward with Line 1a-e on business tax returns.


NFIB is the nation’s leading small business association, with offices in Washington, D.C. and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists sends their views directly to state and federal lawmakers through our unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of our members to own, operate and grow their businesses. More information is available online at

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