IRS 1099-K Form Information

The Housing Assistance Tax Act of 2008 included the enactment of Section 6050W of the Internal Revenue Code.

This is a relatively new Internal Revenue Service (IRS) mandate that requires certain companies that settle payments to merchants, including Peoples Bank Merchant Services and other payment processors, to report the gross sales of their merchants’ credit and debit card transactions to the IRS each year. The new requirement took effect on January 1, 2011.

 

What is Reported

Your business' legal business name and tax identification number (as submitted on your merchant application) along with the gross amount of reportable transactions are required to be reported to the IRS. In the event the business' legal name and TIN or SSN do not match the IRS database, the IRS could assess a $150 non-compliance fee as well as withhold 28% of your processing volume. These funds would go directly to the IRS and would not be available for refund until your taxes are filed.

You will receive a copy of the 1099-K form submitted to the IRS ahead of April 15 annually. The 1099-K will detail your gross card processing volume for the preceding tax year. The reported volumes are not adjusted for refunds, chargebacks, credits, fees or reserves.

Sample 1099-K

 

For More Information

Please contact the Business Services Department at 360-647-4420 or [email protected] with any questions concerning your business’ reported card volume or the reporting mandate.

 

Frequently Asked Questions

Q. When do the IRS changes go into effect?
A. IRS 6050W covers all transactions in the tax year 2012, and each tax year that follows. Beginning in January 2012, merchants will received a 1099-K form by mail. Transactions occurring prior to 2011 will not be affected by this legislation.
Q. Will all merchants receive 1099-K forms?
A. Yes. 1099-K forms will be mailed annually before April 15.
Q. What does Peoples need from a merchant as a result of the IRS changes?
A. Peoples Bank must have your TIN (or SSN) and Tax Filing Name and they must match what the IRS has on file for your businesses.
TIN = Tax Identification Number
SSN = Social Security Number
Q. What happens if my account information doesn’t match what the IRS has on file?
A. If your account information does not match what the IRS has on file for your business, Peoples Bank Merchant Services will be required by the IRS to withhold a percentage of your card sales. (Currently the rate is 28%) Any withholding will appear on your 1099-K form. It is our understanding that withheld amounts can only be refunded by the IRS after you file your Federal tax returns.
Q. Are non-profit organizations affected by the new IRS Tax Law 6050W?
A. Yes. Non-profits will be required to verify that their TIN (or SSN) and Tax Filing Name matches what the IRS has on file. And we are required to report their information to the IRS.
Q. What types of card transactions are included?
A. All credit, signature debit, pin debit, electronic bank transfer (EBT), and certain gift card transactions are included in this mandate.
Note: The "gross amount" of reportable transactions means the total dollar amount of aggregate transactions without regard to any credits, charge-backs, fees, cash equivalents, discounts, refunds, or any other amounts. The "gross amount" is strictly the total dollar value paid to the participating payees before any fees, refunds, or any other amounts are considered.
Q. What is the Business Legal Name?
A. The Business Legal Name should be the same business name that you provided to the IRS when applying for your Taxpayer Identification Number (TIN). The Business Legal Name is the Tax Filing name; the name you use when you file your business’ taxes with the IRS.
Q. What is a TIN and SSN?
TIN = Tax Identification Number
SSN = Social Security Number
How you have set up your business will determine which number will be required to verify your business with the IRS.
Q. How do I find out what the IRS has on file as my Business Legal Name and TIN?
A. Refer to your last tax return for your business, or contact your tax professional.

Visit the IRS website for more information: www.irs.gov/irb/2009-49_IRB/ar13.html

Need Help?

We're only an email or phone call away.

Business Services

Accept Gift Cards

Add gift cards to your merchant processing suite to save time and increase revenue.

Explore Gift Cards