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Tax compliance for credit card accounts

Explanation of IRS reporting requirements for payment-processing accounts, including details on Form 1099-K.

IRS Requirements for Merchant Processing

Beginning calendar year 2011, the IRS (Section 6050W of the IRS Code) requires reporting of all payment card and third party network transactions. As your reporting entity, we will be required to file an annual information return with the IRS and provide you with a Form 1099-K, which reports monthly and annual gross credit card transaction sales.

A 1099-K form will be available by 1/31/2017. In April 2017 QuickBooks Payments will file a copy of the 1099-K with the IRS. To comply with this law, it is necessary that we have your correct taxpayer ID number (TIN) and tax filing name. If we receive notice that the information on your merchant account is inaccurate, a separate notification will be sent to you so you can promptly provide the validation of your tax information.

Merchants with missing, incorrect or mismatched TINs may be subject to Federal and State (where applicable) backup withholding (Federal withholding is currently 28%) from your gross sales amount of your reportable transactions. For additional information please visit the IRS website at http://www.irs.gov. It is important to note that QuickBooks Payments cannot provide tax or legal advice. Please see your tax or legal advisor to determine how these tax regulations may apply to your business.

Frequently-Asked Questions: IRS Mandate, Section 6050W

What is IRS 6050W?
IRS 6050W describes reporting requirements from the IRS. Under 6050W, QuickBooks Payments, as well as other payment processors, are required to report the total gross sales volume of our merchants' payment card transactions to the IRS. This requirement took effect on January 1, 2011.
Our goal is to help our customers understand the requirements and how it may impact you. As part of the IRS mandate, QuickBooks Payments, must verify that our files reflect the correct Tax Filing Name and Taxpayer Identification Number (TIN, or this could be your SSN) for your business. Both pieces of information must match what the IRS has on file for your business.

Will all merchants receive 1099-K forms?

No. If you did not process card transactions in 2016 you will not receive a 1099-K. In addition, some specific merchant account types may not receive a 1099-K if they had less than 200 card transactions and $20,000 in gross sales.

1099-K Forms will be available by January 31, 2017. At that time, you can download your 1099-K form from our online service center. If you do not see a 1099-K, then the IRS did not require Intuit to create one.

What happens if my account information doesn't match what the IRS has on file?

If your account information does not match what the IRS has on file for your business, QuickBooks Payments may be required by the IRS to withhold a percentage of your card sales. (Currently the rate is 28% for Federal, in addition to any applicable state withholding requirements.) 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.

How do I find out what the IRS has on file as my Business Legal Name and TIN?
Refer to your last tax return for your business, or contact your tax professional.

Is there an IRS website that can validate that this reporting is necessary?
Yes. There is an IRS website for merchants to validate that this reporting is required by the IRS. The IRS website is: http://www.irs.gov

Will QuickBooks Payments validate my TIN and Business Legal Name with the IRS?
Yes. When you completed a Merchant application QuickBooks Payments will compare the information that was provided on the application to the IRS records.

If my TIN and/or Business Legal Name does not match with the IRS records will I be notified?
Yes. QuickBooks Payments will attempt to notify Merchants that we feel may have incorrect information and we will request help in obtaining the correct data.

Will QuickBooks Payments help me with my tax return?
While we're committed to helping our customers understand the 6050W reporting requirements and your 1099-K form, QuickBooks Payments is not qualified to give you specific tax guidance. Please contact a tax professional.

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