IRS Tax Mandate

IRS Tax Mandate

Internal Revenue Code (IRS) Section 6050W

Under the new legislation, Moneris Solutions will be required to report a merchant's gross Visa®, MasterCard® and Discover® sales to the IRS annually. The IRS changes will apply to all payment providers, including Moneris Solutions. They will take effect for sales that occur on or after January 1, 2011 with the first reports going to merchants and IRS in early 2012. You may be required to verify and/or update a Tax Identification Number, such as, a Social Security Number (SSN), or Employer Identification Number (EIN), to your existing account(s).

When do the IRS changes go into effect?

IRS Section 6050W covers all transactions in the tax year 2011 and each tax year that follows. Beginning in 2012, customers will receive a 1099-K Form for their 2011 transactions either electronically or by mail. Transactions occurring prior to 2011 will not be reported.

What does Moneris Solutions need from their customers as a result of the IRS changes?

In 2011, Moneris Solutions will ask impacted customers to update their account(s) by providing a Tax Identification Number such as, a Social Security Number (SSN), or Employer Identification Number (EIN). Moneris Solutions will also ask impacted customers to verify their name, physical address and email address to ensure we report accurately to the IRS.

This information will only be requested from customers that are potentially impacted by these requirements. If you are required to update your information, Moneris Solutions will notify you.

For merchants who have not provided a valid Tax ID, the IRS may request backup withholding at a rate of 28%

We have recently become aware that some states may also require withholding

  • California requiring 7% withholding and reporting
  • New York and Hawaii require reporting only

Housing Assistance Tax Act of 2008:

  • Section 6050W of the tax code includes the new requirements
  • Merchant Acquiring entities must report gross sales for each merchant:
    • Reporting entities encouraged to collect and verify Tax ID numbers
    • Any merchant whose name/TIN does not match to the IRS database is subject to withholding in 2012
  • Eligible payment types are those which involve networks of a substantial number of unrelated merchants:
    • Excludes "closed loop" and many private label
    • However, store cards used at non-corporate (non-related) stores are in scope
  • The purpose is to encourage accurate tax filing

For more information on this IRS Tax Mandate, please visit these following helpful sites: