Important IRS requirements for 2011
The federal Housing Assistance Tax Act of 2008 included the enactment of new Section 6050W of the Internal Revenue Code (Section 6050W) that requires reporting entities to annually report payments in settlement of card and payment third party network transactions to the IRS for all merchants.
Section 6050W also requires reporting entities to perform backup withholding from merchant funding by deducting and withholding income tax (currently 28%) from the gross sales amount of reportable transactions if (a) the merchant fails to provide the merchant’s TIN to the reporting entity, or (b) the IRS notifies the reporting entity that the TIN (when matched with the name) is incorrect. Merchants subject to Federal income tax backup withholding may also be subject to backup withholding for specific states as applicable. To avoid backup withholding, beginning in January 2012, it is very important that merchants provide the correct name and Tax Identification Number (TIN) that is used when filing their tax return that includes the transactions for their business.
To begin the validation process, please enter your Merchant Identification Number (MID) beginning with 5101, 4343, 4139 or 5436 which can be found on your Merchant processing statement.