IRS Compliance

Taxpayer Identification Number Compliance

Frequently asked questions

What is Internal Revenue Code (IRC) Section 6050W?

Section 6050W, enacted by the Housing Assistance Tax Act of 2008, requires a payment settlement entity to report payments made to merchants for goods and services in settlement of payment card and third-party payment network transactions.

This new law requires payment settlement entities to report the legal name, address and taxpayer identification number (“TIN”) for each participating merchant, along with the gross amount of the reportable payments to each merchant in settlement of payment card transactions for goods and services.

What is a payment settlement entity?

A “payment settlement entity” is, in the case of a payment card transaction, a merchant acquiring entity. A “merchant acquiring entity” is the bank or other organization with the contractual obligation to make payment to participating merchants in settlement of payment card transactions.

What is a payment card?

A “payment card” generally means a credit card, debit card, transit card, governmentally-issued electronic benefit transaction (EBT) card, stored-value card, or any other card which is accepted as payment by merchants.

Where can I find more information about the IRS 6050W regulation?

You can visit the IRS Website here: http://www.irs.gov/pub/irs-drop/n-09-19.pdf

What are our plans for helping you comply?

Our goal is to help our merchants understand and comply with the new IRS reporting requirements and to avoid any suspension of processing or backup withholding. We perform upfront TIN matching on all new applications submitted to us. If the TIN provided does not match the IRS database, we flag this discrepancy for corrective action. When merchants dial into our contact center, our representatives are presented with the TIN matching status for the merchant account. If the information doesn’t match, we use this contact as an opportunity to request updated information.

What happens if my TIN match is not corrected?

If we receive notice from the IRS that we do not have the correct information on a merchant’s 1099-K, we will try to obtain the correct information from the merchant within the 30 business days allowed to make such correction. This will include sending multiple “B-Notices” to the merchant, as required by the IRS This B-Notice is to inform you that the taxpayer identification number (TIN) on your Merchant Services account does not match the Internal Revenue Service (IRS) records. The IRS considers an incorrect TIN where either the name or number shown on an account does not match a name and number combination in the IRS files or the files of the Social Security Administration (SSA). If you do not take the appropriate action to resolve your TIN discrepancy, then backup withholding is required. This is a percentage of future payments we make to your account designated by the IRS. The Federal backup withholding is 28%, in addition to possible State tax withholding (percentage varies by state). Along with backup withholding, you may be subject to a $50 penalty by the IRS for failing to provide your correct Name/TIN combination to Merchant Services. Within this notice you will find information and instructions on how to make your account records accurate and avoid backup withholding and the penalty

What is a W-9 form?

The W-9 form is an Internal Revenue Service form to be completed by a taxpayer and given to a person required to file an information return (such as a 1099-K) with the IRS. By completing and signing this form, the taxpayer certifies that the TIN it is providing is correct.