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: IRS Section 6050W
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. In addition, we compare our existing merchant base to the IRS database on a monthly basis in order to identify those merchants whose account information does not match the IRS database. 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.
We also proactively contact merchants whose information doesn’t match and provide them with options for updating their information. These options include telephone, fax, U.S. mail and a secure Internet portal. In addition, we make outbound calls to merchants whose information doesn’t match in order 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 a “B-Notice” to the merchant, as required by the IRS. If we are unsuccessful in getting the correct information in a timely fashion, our plan is to suspend the merchant’s processing privileges until we are contacted by the merchant and provided with an executed W-9 or with the correct information needed to match the IRS database. We believe that, from the merchant’s standpoint, this is preferable to withholding 28% of the merchant’s future processing proceeds. In many cases, such withholding is highly detrimental to the merchant and, once the 28% is withheld by the payment settlement entity, it cannot be recovered by us.
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.