February 4th, 2013 by Jamie Estep
Make sure your credit card processor has the correct tax information for your business
The IRS 6050W mandate passed in 2008 requires credit card processors to report merchant processing revenue to the IRS for each year of active processing. The IRS essentially thinks business owners are cheating on their taxes and are using credit card processors to try and identify egregious tax dodgers. Merchants with tax related information that is incorrect when their processors files a 1099-K will be subject to having funds held by their credit card processor. Last year, we were given a bye and didn’t have to hold merchant funds for those merchants with incorrect TIN information. This year appears to be different and processors will be holding funds per IRS regulations. We’ve already seen numerous cases where Amex was forced to put a hold on merchant’s funds.
You may have recently received notice from your credit card processor of your TIN or corporate name mismatching, or simply a notice to verify your processor has the correct TIN/EIN number and corporate name on file for your business. Do not ignore these notices!
It is extremely important to make sure this information is up to date and is correct with your processor. Incorrect TIN information can result in your processor being forced to hold the money being processed through your merchant account. American Express is a separate entity and you need to make sure that your TIN information is correct with American Express separately from your merchant account.
To update this information, you will be required to provide your credit card processor or American Express with an accurate W9 form. Completing this form properly is critical to preventing a TIN mismatch. This form must be filled out with the exact information you used to register your TIN with the IRS which is also the same information required when filing your taxes. A single misplaced letter or punctuation, the incorrect type of business, or an incorrect TIN will cause a mismatch. The IRS doesn’t have an adequate system for your processor to verify this information, or lookup the correct information, so it is up to you to make sure it is accurate. If you don’t know the TIN or the exact name you established your TIN under, you can contact the IRS to get the correct information.
Make sure this information is correct with your processor and with American Express to avoid having your money held.