IRS Reporting Requirements
The Housing Assistance Tax Act of 2008 included the enactment of Section 6050W of the IRS Code. This is an important new measure that requires obligated reporting entities to report the gross amounts of their merchant customers' payment card and third party network transactions to the IRS.
As a result of these new requirements, which applies to all transactions beginning on January 2, 2011, merchants are obligated to provide their tax identification number (TIN) and tax filing name. If the IRS notifies the reporting entity that there is a discrepancy between the information provided by the merchant and the IRS records, the reporting entity will be required to withhold tax on the merchant's future funding amounts. For additional information, the IRS website is http://edocket.access.gpo.gov/2010/pdf/2010-20200.pdf