Important IRS requirements for 2011
Effective January 1, 2011, all Obligated Reporting Entities are required to report your gross reportable sales to the IRS and file an annual information return (per Section 6050W of the IRS Code). To comply with this new law, your processor must ensure that your Taxpayer Identification Number (TIN) and the Tax Filing Name of your business matches the information that you have given them.
What does this mean to you?
You will receive an annual 1099-K from your processor beginning in 2012 for transactions reported in calendar year 2011. Effective January 1, 2012, if your legal filing name and/or Tax Identification Number (TIN) in your processors system does not match the IRS database, your merchant account may be subject to IRS withholdings of gross settled transactions at the current daily rate of 28% until the discrepancy has been corrected. If you are entitled to a reimbursement, any withheld amounts will be reimbursed by the IRS with your annual tax filing the following year.
To avoid such actions, you processor is actively working with the IRS to validate the information that they currently have on file.
