OVERVIEW
On January 1, 2011, the IRS enacted section 6050W, an amendment to the Federal Housing Assistance Tax Act of 2008. This IRS mandate requires all merchant service providers to validate the legal name and Tax Identification Number (TIN) for every merchant in their portfolio, and report to the IRS all annual revenues associated with these accounts. At the onset of 2012 and each year thereafter, merchants will receive form 1099-K reporting their total gross sales of credit card transactions for the previous year.
HOW DOES 6050W AFFECT ME?
Section 6050W of the IRS Code requires reporting of all payment card and third party network transactions. Reporting entities will be required to file an annual information return with the IRS and provide all merchants with form 1099-K, reporting monthly and annual gross sales. To comply with this new law, it is critical that we have your correct taxpayer ID number (TIN) and business tax filing name. For additional details regarding this reporting and the validation of your tax information, contact us at 1-877-267-4324.
WHAT HAPPENS IF I DO NOT PROVIDE THE REQUESTED INFORMATION?
As an IRS requirement, effective 2013, merchants who have not provided their correct and matching Tax Identification Number (TIN) will incur a 28% withholding tax, from their gross credit card sales, for the previous year (2012). The 28% withholding tax will be held by our Sponsor Bank(s) and released only when notified by the IRS to do so or if not rectified, ultimately submitted to the IRS. CMS has no access to or control over these withheld funds. CMS has and will continue to attempt to reach each merchant to verify this information but it is ultimately the merchant's responsibility to furnish the required information to avoid backup withholding tax and/or penalties.
To find out more information about the Merchant Tax Reporting please visit the IRS Website below
https://www.irs.gov/businesses/small-businesses-self-employed/backup-withholding
To correct missing or unmatched Tax ID information, call CMS Customer Service at 1-877-267-4324.
Article ID: 36000106342