How will this IRS rule impact merchants like you?
Effective January 1, 2011, the IRS requires all merchant acquirers to report transaction information on behalf of their merchants. This requirement is part of the Housing and Economic Recovery Act of 2008.
Starting in 2011:
- Merchant acquirers, including Premium Card Solutions will be required to calculate and store the gross amount of reportable payment card transactions, coupled with the correct legal name, address and Taxpayer Identification Number (TIN) of all merchants.
- Additionally, Premium Card Solutions will be required to produce and file a Federal IRS 1099-K form for each merchant. This form will report the gross amount of reportable payment transactions for each merchant’s activity in 2011. Premium Card Solutions must supply a copy to each participating merchant by January 31, 2012 (and each year thereafter). Premium Card Solutions will also file these forms with the IRS.
- In addition, IRS backup withholding rules will commence in 2013. That means, if a merchant’s TIN and/or legal name are missing, or there is a discrepancy between the information Premium Card Solutions has on file and IRS records, Premium Card Solutions will be required to withhold 28 percent of the merchant’s reportable payment card transactions until the issue is resolved.
What is Premium Card Solutions doing to comply with the IRS?
- Premium Card Solutions is working diligently to ensure that the proper processes and tools are in place to comply with this new reporting law.
- We are verifying that the information we have on file for our merchants matches IRS tax records.
- To avoid the possibility of backup withholding, we are in the process of notifying you if we are unable to verify your TIN and/or legal name with IRS records.
As a merchant, what can you do?
We suggest that you verify your TIN via one or more of the following methods:
- Review your tax records
- Contact your accountant/tax advisor
- Consult your company’s Legal or Tax Department
Premium Card Solutions is here to help
We understand that this is uncharted territory, and the requirements may be unfamiliar to you. You are a valued customer, and we are here to assist you as needed.
For more details, please download the New IRS Merchant Transaction Reporting Requirements document (PDF). If you prefer to discuss this with someone, you may contact your Premium Card Solutions account executive or call the phone number on your merchant statement.
In addition, more information on Form 1099K can be found on the IRS website.