IRS Letter 5043 – Notification of Possible Income Underreporting
The IRS needs verification of the income that was reported to them by credit card merchants and/or third-party networks on Forms 1099-K.
Type of Notice: Return accuracy
Likely next step: Address a business audit
Also see: Business penalties, Unpaid business taxes
Why you received IRS Letter 5043
- You received income through a credit card merchant account and/or through other third-party network transactions.
- You filed a tax return reporting business income.
- The IRS thinks that your tax return shows an unusually high portion of gross receipts attributable to credit card payments. The IRS would typically expect a higher portion of gross receipts from cash and checks for your type of business.
- Letter 5043 was sent to inform you that gross receipts may be underreported. The letter requests that you review the Forms 1099-K listed on the letter. The percentages expected for similar businesses and the dollar amount that was potentially underreported is provided. You are asked to file an amended return if additional income should be reported. If there is no additional income, you need to explain why the portion of receipts from credit card sales is higher than expected.
Notice deadline: 30 days
If you miss the deadline: The IRS may audit the return or propose additional taxes, penalties, and interest.
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