IRS Reporting Requirements for Credit and Debit Card Processing
In 2008, the US Congress passed the Housing and Economic Recovery Act. This legislation contains a new federal reguation created to help the IRS identify underreported sales. The law requires "merchant acquiring entities" to file a Form 1099-K with the IRS (an information return) that reports year-end gross amounts of their merchants' credit, debit, gift card, and e-commerce transactions. A merchant acquiring entity is defined by the statue as the bank or other organization contractually obligated to make payment to merchants in settlement of payment card transactions. These requirements will apply to transactions beginning on January 1, 2011, and the required reporting begins in 2012.
In order to provide the IRS with the required information, all merchant acquiring entities must collect and verify the Tax Identification Number (TIN) and associated legal business name and address for each merchant on file. TIN is a generic term to refer to a business' Employer Identification Number (EIN/Federal Tax ID) or the business owner's Social Security Number (SSN). If you are notified by your merchant acquiring entity that your TIN or legal business name in their records does not match the IRS' records, you must provide your merchant acquiring entity with a Form W9. More information on IRS reporting requirements is available here.
Burlington Bank Card provides all of our merchants with access to an enhanced reporting site called Settlement Reconciliation Service (SRS) to help you understand the breakdown of all your gross credit, debit, and gift card transaction activity as it is reported on your Form 1099K. This simple, clear and complete reporting service provides flexible access to reports on your transactions, chargebacks and other expenses related to your electronic payments processing.