The Federal Housing Assistance Act of 2008 included the enactment of Section 6050W of the Internal Revenue Code. Section 6050W made it a requirement for ALL processors to report merchants’ gross sales amount from settled transactions (Visa, MasterCard, Discover, PIN debit, etc). Per the IRS’s definition, gross sales amount means the “total dollar amount of total reportable payment transactions for each participating payee without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts or any other amount.” (www.irs.gov)
In order for your processor to report to the IRS as required by law, it is necerssary that your legal business name and taxpayer ID number (TIN) match EXACTLY with what the IRS has on file. Here’s why this is important to you: If there is a descrepency in legal name or TIN that prevents the processor from reporting to the IRS, the consequences are very nasty to you, including mandatory withholding of at least 28% of your total deposits which the IRS will not release until you file your 2012 taxes.
PLEASE be proactive and don’t let this major headache happen to you. I would suggest that you contact your processor Customer Service department and make sure your legal name and TIN match exactly. Please do it TODAY.. If you don’t and the consequences befall you, neither I nor your processor nor anybody else will be able to help you. This is an industry-wide requirement mandated by the government–no processors and no merchants are exempt.
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