IRS Begins Matching Program with Form 1099-K | USTaxAid

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IRS Begins Matching Program with Form 1099-K

Written by Diane Kennedy, CPA on December 14, 2012


This all started for the 2011 tax year. So, in January 2012, you got a Form 1099-K. But nothing happened. The IRS told you not to change anything in the way you reported. That’s because they weren’t ready with their matching program and their automatic audits.

This year they’re ready. If you get a Form 1099-K, or think you should have, the IRS is going to try to match the form with what you file.  Now here’s where it gets tricky.

The matching program is not precise.  For example, if you make a bunch of sales at the end of December and then need to wait for them to clear your bank account, it will show on the Form 1099-K, but not in your back account.

The Form 1099-K is also going to show the gross amount you received, without deducting for shipping & handling or for discounts or refunds.

In other words, you’re going to have to reconcile the Form 1099-K to the gross income you report on your tax return.

The IRS has an automatic matching program that they are testing this year. If you don’t match, expect a notice from the IRS. And if you don’t respond, things could get a little tense as they expect to follow up on them all.


  1. Pam Ortega says:


    I received other notices indicating that this reporting was cabashed last year? Is this not so.
    Came across on a klipinger letter.

  2. Anita says:

    I’m curious to know this as well. If it is still in effect, will the tax forms have a way of showing the ‘reconciling’ of the 1099-K?

  3. Diane Kennedy says:

    Sorry Pam, the Form 1099-K is very much alive. Here’s a link to the IRS instructions for the 2012 forms.,-Merchant-Card-and-Third-Party-Network-Payments

  4. Diane Kennedy says:

    Anita, the forms do not have a reconciliation which is something that has CPAs buzzing right now. The form will show monthly amounts, but you are only required to report the annual.

    We will show the gross amount as reported on the Form 1099-K and then make adjustments for discounts, returns, shipping & handling portion and accrual adjustment. I will probably show a little detail on the accrual in a footnote on the return. Still haven’t decided yet on that.

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