Merchant Account Processors have less than 2 months to verify their merchants’ accurate Tax ID Numbers and business entity names before they are forced to levy 28% withholding taxes. The Housing Tax Act of 2008 included the enactment of section 6050W of the Internal Revenue Code which requires merchant account processors to report merchants total gross processing amounts to the Internal Revenue Service. The reporting entity must also provide merchants with a corresponding 1099-K form.
This new requirement includes all processors and merchants, there are no exemptions. Reporting begins in January 2012 and includes all transactions beginning January 2011.
All merchants must provide their processors with their valid tax identification number (TIN) and tax filing name. If a merchant fails to provide the TIN and tax filing name, or there is a discrepancy between the information provided and the information on file with the IRS, the merchant account provider will be required to hold taxes on future transaction funds. The backup withholding is currently 28%.
Merchants must ensure that the TIN and tax filing name provided to their processor matches what is on file with the IRS to avoid any future backup withholding. Payment processors have been busy implementing procedures to complete the process and are concerned about merchant’s who fail to comply and are doing everything to assist their clients in getting this TAX information up to date. Some businesses have lost their IRS tax certificate that gave the name of the business and EIN number and are not sure of the exact name or the number of their small business. Many small businesses aren’t required to obtain a EIN number and often use their SSN as their Tax ID number (TIN). If this is the case, the correct business name with the SSN is the owners name not their ‘Doing Business As’ (DBA) name, it is the business owners name.
Payment Processors are spending countless hours and resources contacting their clients to complete the task in time to run accurate 1099Ks before the end of the year. The IRS will debut the version ‘K’ of the 1099 form this year for all payment processors to send gross income reports out to their merchants. Although the card payment industry has been aware of this new IRS code requirement, it hasn’t been so easy to get into compliance. Pushing or threatening their clients to comply is not good for business. Processors are reluctant to employ harsh tactics with their clients instead many are seeking help to validate and verify EINs with companies like Liberty Data, Inc. With two web portals; FEINSearch.com and REALSearch.com Liberty data, Inc. and offers businesses tools to access and append their merchant lists against their 16.8 million EINs in their databases. With 18 years’ experience leading the nation in quantity of EINS and SSN, FEINsearch.com offer businesses corporate solutions to solve the 1099K headache.
Not only payment processors face the 1099 and W9 problem. Correct tax IDs are now required on many US government and customs forms. Having no EIN or an incorrect EIN may slow down or delay your transaction. In addition, EINs are required for “Know Your Customer” compliance in the financial industry as well as for compliance with the USA PATRIOT Act.
FEINsearch.com’s EIN locate and verify service quickly and easily locates, and verifies the EIN data businesses require so they can complete their forms accurately. FEINSearch.com offers a number of plans designed to meet every need and budget. Three ways to use the website:
- Corporate EIN Lookup Plans – Search more than 16.8 Million Federal Employer Tax ID Numbers (FEIN) with your own web portal for single user or multi-use license.
- EIN Batch-Match Service – have the FEINSearch.com team do the work of accurately append EINs and business data with 24 hours turn around.
- API Integrated solution – Seamlessly access the EIN database from your own software application with easy XML solution.
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