In 2008, Congress passed the Housing and Economic Recovery Act. As part of the Act, new Section 6050W of the Internal Revenue code was enacted, which requires “merchant acquiring entities” to report gross amounts of payment card transactions to the IRS for each of their merchant customers starting in 2011. As such, beginning with the 2011 tax year, we are required to file information returns (Form 1099-K).

As a result of this reporting law, we are required to: Collect and verify the tax identification number (TIN) and legal name of all our merchants. Withhold, on behalf of the IRS, 24% of payment card transactions for any merchant whose TIN/legal name combination does not match what is on file with the IRS. All monies withheld are immediately remitted to the IRS.

New 1099-K Reporting Requirements for Payment Settlement Entities