Wow..OK fellow esti's. The IRS is now really cracking down on the whole independent contractor vs employee issue, tips and income. A great presentation to see is the OR Cosmetology board meeting. April 2012 OR Board Meeting Basically ALL merchant card and 3rd party transactions will be reported to the IRS on a 1099 K. Internet transactions 3rd party network transactions-not required unless more than 200 transactions and more than $20,000 (pay pal) are the exception.  So if you are classified as an independent contractor and the spa/salon is processing your payments for you, it is a huge red flag. 2012 is the year that this is really getting implemented.2011 New reporting rules-ALERT check it out!

By the way this is part of legislation passed in 2008.