- What is IRS 6050W?
- When do the IRS changes go into effect?
- What is TIN matching?
- What happens if my account information doesn’t match what the IRS has on file?
- How will I know if my account information does not match?
- What would cause this mismatch?
- How do I find out what the IRS has on file as my Business Legal Name and TIN?
- What is the Business Legal Name?
- multiple merchant ID numbers (MIDs) under the same TIN, do I need to validate each MID number?
- What if I do not want to validate my W-9 information?
- Will you cancel my account if I refuse to comply or update my TIN or Tax Filing Name?
- Is there an IRS website that can validate that this reporting is necessary?
- What happens to my money if it is withheld?
- Will all merchants receive 1099-K forms?
- What types of card transactions are included?
- Will all income be reported as part of our sales volume?
- Will all income be reported as part of our sales volume?
- Will cash back portions on PIN debit transactions be reported?
- Will transactions that are run as customer credits be deducted from the sales volume reported to the IRS?
- Can I, or someone representing me, provide information to the IRS, including corrections or updates?
About IRS 6050W
What is IRS 6050W?
In January 2011, the IRS enacted section 6050W as an amendment to the Federal Housing Assistance Tax Act of 2008. IRS 6050W describes new reporting requirements that require “all merchant acquiring entities” to annually report the payment card transactions they process for participating merchants on 1099-K forms. These forms will report the gross amount of the transactions that were paid with a payment card to every merchant. As your payments processor, our goal is to help you understand the new requirement and how it may impact you.
When do the IRS changes go into effect?
IRS 6050W covers all transactions in the tax year 2011, and each tax year that follows. Beginning in January 2012, merchants who processed with us in 2011 will be sent a 1099-K form by mail. Transactions occurring prior to 2011 will not be affected by this legislation.
What is TIN matching?
As part of the new IRS mandate, payments processors must verify that their files reflect the correct Tax Filing Name and Taxpayer Identification Number (TIN, or this could be your SSN if you are a sole proprietor) for your business. Both pieces of information must match what the IRS has on file for your business.
About TIN Matching
What happens if my account information doesn’t match what the IRS has on file?
If your business records are not validated as a match by January 2012, we will be notified by the IRS to withhold a percentage of your card sales. (Currently the rate is 28% for Federal, in addition to any applicable state withholding requirements.)
How will I know if my account information does not match?
Every merchant will be mailed a letter from us no later than September 5, 2011. This letter will let you know if your information is matched, or whether it is incomplete or not a match. If your information does not match, or if you have not received your letter, you must immediately contact our dedicated Customer Service specialists at 1-888-830-0555. Please have your W-9 or last tax return with you when you make this call.
What would cause this mismatch?
There could be several reasons – for example, a merchant may have given us a DBA name rather than the legal name given to the IRS. Or information on an application was incorrect or never fully completed. It is extremely important that merchants provide information exactly as it appears on your last tax return.
How do I find out what the IRS has on file as my Business Legal Name and TIN?
Refer to your last tax return for your business, or contact your tax professional.
What is the Business Legal Name?
The Business Legal Name should be the same business name that you provided to the IRS when applying for your Taxpayer Identification Number (TIN). The Business Legal Name is the Tax Filing name; the name you use when you file your business’ taxes with the IRS.
In the case of multiple merchant ID numbers (MIDs) under the same TIN, do I need to validate each MID number?
Yes, all merchant ID numbers associated with the same TIN will need to be validated. Your Customer Service specialist will be able to guide you through the validation process for each of your MIDs.
What if I do not want to validate my W-9 information?
Compliance with this program is mandated by the Federal Government. Failure to provide accurate information could lead to penalties and fines, as well as income withholding.
Will you cancel my account if I refuse to comply or update my TIN or Tax Filing Name?
No, we will not cancel your account and will continue to value your business and process your payments responsibly. However, you will be subject to a withholding of a portion of your card sales, and once these monies are withheld we have no control over when, if, or how they will be released by the government.
Is there an IRS website that can validate that this reporting is necessary?
Yes. There is an IRS website for merchants to validate that this reporting is required by the IRS. The IRS website is: www.irs.gov/irb/2009-49_IRB/ar13.html.
What happens to my money if it is withheld?
If we are required to withhold the taxable portion of your income, it will remain on deposit with our sponsor bank. Per IRS regulations, we are not permitted to touch or return these funds to merchants. Withheld amounts can only be refunded by the IRS after you file your Federal tax returns. Merchants are advised to consult their tax advisors or the IRS directly to find out more information. More information is available on the IRS website: www.irs.gov/pub/irs-pdf/p1281.pdf or www.irs.gov/efile/article/0,,id=98145,00.html.
About Reporting
Will all merchants receive 1099-K forms?
Yes. 1099-K forms will be mailed in January 2012.
What types of card transactions are included?
All credit, signature debit, PIN debit, electronic bank transfer (EBT), and certain gift card transactions are included in this mandate.
Will all income be reported as part of our sales volume?
Anything with a Visa, MasterCard or Discover logo will be reportable. This includes pre-paid Visa, MasterCard or Discover cards. American Express transactions are currently excluded from the reporting mandate.
Will cash back portions on PIN debit transactions be reported?
Yes, both the cash back and the amount of the sale will be reported.
Will transactions that are run as customer credits be deducted from the sales volume reported to the IRS?
No, the amount reported to the IRS will be gross sales, which does not account for returns or refunds.
Can I, or someone representing me, provide information to the IRS, including corrections or updates?
No, IRS regulation requires that we, as your merchant services provider, file all tax information on your behalf. However, rest assured that we will represent you admirably and reliably, and contact you if there are any problems or issues.
