New IRS Reporting Laws for Merchant Services | IRS Code Section 6050W
New IRS reporting laws for merchant services | IRS code section 6050W. For the past few years, the IRS has been working on a new law requiring all merchants to provide reports on their merchant account processing volumes. These new requirements under IRS Code Section 6050W are likely a simple attempt to catch a few businesses in the practice of grossly underpaying their taxes, however, the new requirements will be far from simple for merchants and processors.
Under the new rules, the merchant account provider or processor will be required to submit a 1099-K for each merchant. The difficulty in this lies in the exact matching of the merchant’s business information on file with the IRS and information listed with the processor. Types of discrepancies may include missing tax id numbers, social security numbers, or differing business names. It will be up to the merchant to make sure all information is matching.
It’s already obvious that there will be issues with merchants and the new law. In order to enforce compliance, the IRS is mandating that the credit card processor withhold 28% of all credit card sales of any merchant with discrepancies until all information is updated and accurate. When the merchant fixes all discrepancies, the 28% will be returned, however, not until year’s end. This backup withholding could cause financial stress for the business.
One of the biggest concerns is the fact banks and processors will be reporting gross receipts. The merchant’s transactions may be less than this amount when they include charge backs, refunds or debit card transactions where customers receive cash back. It will be up to the merchant to keep track of these items separately to be reconciled accurately with the IRS in order to avoid fees and penalties.
There are two exceptions to the requirements in which the processor will not have to file a 1099-K:
1. The merchant’s total annual transactions do not exceed $20,000
2. The merchant’s total number of transactions does not exceed 200.
Although credit card payments will be reported at yearend 2011, as a gesture of good faith, the IRS is allowing merchants additional time to fix discrepancies. The IRS will not begin assessing penalties for non-compliance until January 2013.
Call your current processor when you have a few moments and make sure your information is up to date.
Recent Blog Posts
Cashless ATM Scrip Credit Card Processing, Script Machines
Cashless ATM Services and Scrip Credit Card Processing for Modern Businesses Since 2004, The Transaction Group (TTG) has been a trusted business services solutions provider helping companies across a wide range of industries [...]
Merchant Account Services Cannabis Dispensary New York
New York Marijuana Dispensary Cannabis Merchant Account Services Operating a New York marijuana dispensary presents a distinct set of challenges, particularly when it comes to [...]
New Jersey Marijuana Dispensary Merchant Account Services
New Jersey Marijuana Dispensary Merchant Account Services Do you own or manage a medical or recreational marijuana dispensary in New Jersey and looking for merchant account [...]
Pennsylvania Marijuana Dispensary Merchant Account Services
Pennsylvania Marijuana Dispensary Merchant Account Services Are you operating a Pennsylvania marijuana dispensary as a cash-only business? If so, it’s time to transition from an [...]
West Virginia Marijuana Dispensary Merchant Account Services
West Virginia Marijuana Dispensary Merchant Account Services Do you own or manage a medical or recreational marijuana dispensary in West Virginia and looking for merchant account [...]
Ohio Marijuana Dispensary Merchant Account Services
Ohio Marijuana Dispensary Merchant Account Services Do you own or manage a medical or recreational marijuana dispensary in Ohio and looking for merchant account services [...]
Minnesota Marijuana Dispensary Cannabis Merchant Account Services
Minnesota Marijuana Dispensary Merchant Account Services Running a cannabis business in presents its own unique challenges, particularly when it comes to processing debit and credit [...]
Missouri Marijuana Dispensary Merchant Account Services
Missouri Marijuana Dispensary Merchant Account Services Do you own or manage a medical or recreational marijuana dispensary in Missouri and looking for merchant account services to [...]
Are you shopping for a better rate? Let us save you money!
Most merchants are unaware that interchange rates are adjusted as much as 2x per year. Over the course of several years, those adjustments can hike up a merchant’s rate and cost the merchant thousands in processing fees. Contact us via the form above, or call us today at 888-383-8056. Chances are, we can save you up to 25% over your existing rates and fees!
Why do businesses choose to work with The Transaction Group?
- We aim for 100% customer satisfaction. We understand that the customer comes first. At the end of the day, if the customer is not happy, we’re not happy.
- We offer a FREE rate analysis to every business. In most cases, we can save a business up to 25% on existing rates and fees. But if we can’t beat a customer’s rate, we’re upfront from the start. We don’t waste the customer’s time.
- We are reliable and always available. If a customer has any concerns, we’re available even after business hours. We’ll address any issues immediately.
- We don’t believe in one-size-fits-all.We provide solutions based on the specific requirements of each and every business. What’s best for one small business may not work for another.
- We have a fast & easy setup process. In most cases, we offer a fast and easy approval and set up. While some high risk businesses can have longer underwriting times, we keep the customer informed throughout the process and work for fast approvals.
- We have solutions for every business type. From low-risk card-present credit card processing solutions to payment processing solutions for high risk e-commerce stores, we’ve got it all.
