As you may be aware, The Housing Assistance Act of 2008 included the enactment of Section 6050W of the Internal Revenue Code, which requires the reporting of certain monetary processing information for each calendar year beginning in 2011.
The Internal Revenue Service (IRS) encourages processors to validate Tax ID Numbers (TINs) when submitting merchant accounts for business and we are currently in the process of matching merchant company names and Federal Tax ID numbers (“TIN”) with the IRS TIN matching database.
Background: The Housing Assistance Tax Act of 2008 included a new section that requires reporting entities to report payment card transactions and third party network transactions to the IRS starting in 2011.
What was The Housing Assistance Tax Act of 2008? The Housing Assistance Tax Act of 2008 is part of the larger Housing and Economic Relief Act of 2008 which was passed in response to the mortgage crisis and rising foreclosure rates. These tax laws provide important tax law changes that impact individuals and small businesses. Highlights of tax provisions include reporting of credit card and merchant payments to the IRS.
WHAT THIS MEANS FOR MERCHANTS
If a merchant receives future advisements from us that their information does not match, it will be crucial for them to respond in a timely manner, as the IRS will require us to withhold 28% of their deposits at a federal level. There are also currently 32 state governments that will also require us to withhold an additional percent of the merchants’ money (exact state percentage withholdings is unknown at this time). If we are required to withhold these funds from merchants, they will be without this money until they file their next year’s taxes. We will be unable to forward merchants any withheld funds. Therefore, it is imperative that our merchants cooperate and send us correct information should they receive an alert from us to do so.