You received one or more of these letters and notices because you may have underreported your gross receipts. This is based on your tax return and Form(s) 1099-K, Payment/Merchant Cards and Third Party Network Transactions that show an unusually high portion of receipts from card payments and other Form 1099-K reportable transactions. It is very important that you respond to the IRS.
Here are some tips to help you in addressing the inquiry.
- Read the notice thoroughly and complete any worksheets.
- Gather your tax records including the 1099-Ks that you have received and determine if you agree with the notice about the underreporting of gross receipts.
- If you have questions, use the contact information provided on the notice.
Form 1099-K is an information return that reports payment card and third party network transactions. You should retain it for your records and use it to assist you in completing your tax return. IRS will send a notice if it believes you owe additional tax or are due a larger refund, or if there is a question about your tax return.