1099 K reporting by credit card companies

In 2011 all credit card companies and third party processors will report to the IRS any taxpayer receiving payments greater than $20,000 or more than 200 transactions per year.  This includes credit cards, debit cards, gift cards, prepaid phone cards and Paypal.  The form is issued annually in January and has boxes for the payments received each month.  No adjustments for credits, discounts, fees, chargebacks or refunded amounts are made on the form.  One of the biggest targets will be small businesses where the IRS will develop a formula for the cash to credit card ratio.  IRS will use that ratio for future tax audits to estimate gross income.