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What is IRS 6050W?
How do I identify my tax filing name?
The Housing Assistance Tax Act of 2008 included the enactment of Section 6050W of the Internal Revenue Code, an important new rule that requires companies like NAB to report the gross amounts of its merchant customers’ payment card transactions to the Internal Revenue Service (IRS). As a result of these requirements, merchants must provide their valid tax identification number (TIN) and tax filing name. If a merchant fails to provide their TIN, or if the IRS provides notification 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 http://www.irs.gov.
The tax filing name is the business name or personal name you use to file your tax returns. If the business is an Individual or Sole Proprietor, the tax filing name is your personal name. If the business is a corporation, partnership, limited liability Company (with an entity designation), a non-profit organization, tax-exempt organization, government organization, or association/estate/trust, then your tax filing name is your business’ legal/corporate name. For assistance confirming tax identification information, call the IRS at 800.829.1040 or contact your local Social Security Administration.
How do I Identify my Taxpayer Identification Number (TIN)?
A Taxpayer Identification Number (TIN) is a number used by the IRS. If you are a sole proprietor, then your TIN may be your Social Security Number (SSN) or Employer Identification Number (EIN). If your business is a corporation, partnership, or LLC, then your TIN will be the Employer Identification Number (EIN) issued by the IRS for your legal entity. For assistance confirming tax identification information, call the IRS at 800.829.1040 or contact your local Social Security Administration.
What is a 1099-K?
A 1099-K is an IRS form used to report a merchant’s gross sales and backup withholding amounts.
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When can I expect to receive my 1099-K?
What information will be provided to the IRS?
The information on my 1099-K is wrong, how do I get it corrected?
What do you mean by “gross” sales?
The IRS requires that the Forms 1099-K are postmarked no later than January 31st. Copies of the Forms 1099-K are available in Payments Hub approximately mid-February. Visit www.paymentshub.com / Business Settings / 1099K & tax.
The IRS will receive the same information that is provided to you on your 1099-K form. This will include gross credit/debit card
processing volume for the current tax year, which will be reported by month, along with the legal business name, and Tax Identification Number (TIN). No sales occurring in the previous tax year or prior to the previous tax year will be reported. This reporting requirement only applies to sales processed beginning January 1st through December 31st of the current tax year. For more information regarding this federally mandated IRS reporting requirement, visit http://www.irs.gov/pub/irs-pdf/f1099k.pdf.
A request for a 1099-K correction must be submitted in writing directly by the Merchant via an email to 1099k@paymentshub.com.
The request must include the tax year(s) involved in the request, as well as specific details explaining the concern with the 1099-K. A completed W-9 must include any request for changes in name and/or taxpayer-identification number. It should be noted that changes in a merchant’s business name to a name that was not submitted as part of the original application must go through the corporate name change process that may result in re-underwriting, along with identity reverification for KYC purposes.
The IRS requires reporting of your “gross” credit/debit card processing volume, which means the total sales volume before any returns, refunds, chargebacks, reversals, processing fees or interchange were assessed. For example, if you processed $40,000 in sales and paid $1,600 in fees, our Form 1099-K will list $40,000 in gross sales. It will be your responsibility to determine the deductibility of fees that you have been charged when you file your tax return as normal.
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How can a merchant obtain a copy of their 1099-K?
How can a merchant receive one (1) 1099-K for all of their accounts?
Is it possible for a merchant to receive more than one (1) Form 1099-K?
Copies of 1099-Ks are available on the Payments Hub merchant portal. Visit www.paymentshub.com / Business Settings / 1099K & Tax.
If a copy is not available, please call customer service at 866.485.8999, ext. 1300.
If you have multiple locations under the same tax filing name and the same taxpayer identification number, then only one Form 1099-K will be issued. In this case, it will include the combined processing volume for all of the locations. If each of your merchant locations has its own separate tax filing name, and unique taxpayer identification number, a Form 1099-K will be provided for each one.
Yes. If you processed with more than one payment processing company or changed payment processing companies within the reporting year and the payment processing company who generates the file is different, then it is possible to receive more than one Form 1099-K. You may also receive a separate 1099-K if you accept American Express or Discover and are funded directly by American Express or Discover. If you receive more than one Form 1099-K, each should reflect a unique Filer Name indicating the payment processor or acquirer that generated the payment file.
How are TIN mismatches communicated?
Merchants may view their TIN status in Payments Hub / Business Settings / 1099K & tax. TIN status are also viewable as an alert on the Daily Snapshot communications (EPX only).
Sales Partners may view their portfolio TIN statuses in the Sales Partner Portal.
If a merchant account has a Name and/or TIN mismatch, the Company will make two annual solicitations for the merchant’s TIN information.
For more information regarding solicitations, see the 1099-K Policy Statement. An email and physical letter will be sent to the merchant to notify them of the requirement to provide a completed and signed W-9 form. The email will provide a means to download and mail or fax a completed W-9 form and Corporate Name Change Request Form (if applicable) for processing. The email will also include a link to DocuSign that may be used to complete and submit a W-9 form electronically via secure email. The mailed letter will include a W-9 form and Corporate Name Change Request Form (if applicable for completion, along with return instructions.
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How can tax updates be submitted?
Can a tax document be submitted via the Payments Hub merchant portal?
All updates to tax information require a supporting document, to include any one (1) of the following:
A completed, signed, and dated W-9 form.
An IRS document containing a merchant’s issued EIN (e.g. LTR 147C).
A Social Security Card (sole proprietors only).
For security purposes, tax documents are to be submitted:
Fax: 248.283.6243
Mail: Attn: 1099K Payments Hub, 250 Stephenson Highway, Troy, MI 48083
At this time, this feature is not available but is noted for future enhancements.
What is the Standard Service Time for processing a tax document?
If the merchant is on backup withholding, the standard processing time for tax documents received is 30 business days. Please send
documentation only once and do not send emails inquiring about status as this may result in delays in processing your documentation. You must also identify as the subject of your document or communication “Backup withholding documentation.” Otherwise, your communication, including documents, will not be recognized as related to backup withholding and the standard service time will not apply. There is no other standard service time for 1099K-related matters, including annual campaigns, the processing of tax documentation, or for responding to communications.
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Where can I call for assistance to verify my tax identification information?
What are the common causes of TIN mismatches?
For assistance confirming tax identification information, call the IRS at 800.829.1040 or contact your local Social Security Administration.
The most common (though not the only) causes of TIN mismatches include confusion in the name registered with the IRS or Social Security Administration, and confusion between the use of a Social Security Number or Employee Identification Number (for sole proprietors).
Avoid these other common causes for TIN mismatches:
Only Sole Proprietors filing with a Social Security Number (SSN) may use an SSN in both the SSN and Federal Tax ID Number fields.
All other business types must supply a valid Social Security Number (SSN) and federally assigned Employer Identification Number (EIN).
Do not deviate from what appears on the tax document. For example, do not substitute “Auto” for “Automotive” or “Corp” for “Corporation.”
Do not substitute “&” for the word “and” unless that is how it appears on the tax document.
Social Security Numbers and Employer Identification Numbers are always 9 digits in length.
Why are closed accounts included in TIN solicitations?
What is a Backup Withholding Notice (B-Notice)?
Closed accounts are included in TIN solicitations only if the processing activity occurred within the applicable tax year. If there is processing, a 1099-K form will be generated and filed with the IRS in January. The IRS expects 1099-K forms to be filed with accurate name and taxpayer information. Inaccurate 1099-K filing may subject filers and merchants to IRS fines and penalties.
A B-Notice is a notice sent to a merchant, in response to a payor’s receipt of a CP2100 Notice from the IRS, warning of impending backup withholding.
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Will I be notified before you start backup withholding on my account?
What is backup withholding?
If you do not provide a tax identification number at the time of application, you will not receive notice before backup withholding commences. This is because the IRS requires that we commence backup withholding immediately. If you provided a tax identification number but your tax filing name and tax identification number do not match what is on file with the IRS, we may provide you with notice before implementing backup withholding; however, we are not obligated by the IRS to provide prior notice.
Backup withholding is a method used by the IRS to make sure it collects taxes on certain income like card processing transactional income. Withholding is imposed on merchants who have been identified by the IRS as having a Personal/ Business Name/TIN mismatch.
IRS law (code section 3406) requires that we perform federal backup withholding of 24% on gross reportable sales. Some states impose additional withholding penalties (California: 7%, Vermont: 6.72%, Maine: 5%). Additionally, the merchant may be subject to a $50 penalty by the IRS for failing to provide a correct taxpayer identification.
How is backup withholding removed?
To remove an account from backup withholding, a tax document is required.
If the TIN was missing from the application, the merchant must provide a completed W-9 IRS form.
If the merchant receives a B-Notice, the B-Notice will indicate the type of tax document required.
Once acceptable tax documentation has been received, and duly executed, backup withholding will be removed within 30 business days.
Important Note: If the tax filing name appearing on line 1 on the W-9 (IRS LTR147C, SS-4 letter) displays a personal or business name (legal/
corporate name) that is different from your original merchant application or currently on record, a legal/corporate name change will be required.
The tax document received cannot be processed until the new name appears in our records.
Send tax documents via:
Fax: 248.283.6243
Mail: Attn: 1099K Payments Hub, 250 Stephenson Highway, Troy, MI 48083
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What happens to funds withheld due to IRS backup withholding?
Can funds withheld for backup withholding be refunded?
IRS regulations require all withheld funds to be remitted to the Department of Treasury twice per week; therefore, all withheld funds are remitted to the IRS almost immediately. Merchants may need to seek assistance from a tax professional for help in recovering their withheld funds.
Funds held due to federal and/or state backup withholding will appear on the annual 1099-K form, which is sent no later than January 31st.
We do not refund withheld funds.
Why did I receive a B-Notice for only one of myaccounts and not all of them?
Where can amounts held for backup withholding be viewed?
B-Notices are issued in response to an impact list appearing on an IRS CP2100 Notice issued to the filer. If a merchant has more than one location sharing the same tax filing name and taxpayer identification number, all accounts may be subject to backup withholding.
Amounts held for backup withholding may be viewed on the merchant’s monthly processing statement.
Why does the IRS indicate they cannot see funds remitted from backup withholding?
The Internal Revenue Service (IRS) cannot validate funds withheld within the current tax year. For example, any for any funds withheld in 2019, they will not have access to that information on a singular merchant level. The IRS relies on companies to report amounts withheld on 1099-Ks at the beginning of the following year.
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Sole Proprietor
What is the business type?
Corporation Partnership
Limited Liability LLC Government Non-Profit Tax Exempt
Association/Estate/Trust
Did you obtain an Employee Identification
Number (EIN) from the IRS for the business?
Social Security Number (SSN) Employee Identification
Number (EIN)
Tax Name and federal tax ID is individual person’s name as it appears on the individual’s social
security card.
Tax Name is the name used to apply for an Employer identification
Number with the IRS.
The federal tax ID number is the 9-digit number assigned by the IRS.
How to identify your Tax Filing Name and Federal Tax ID Number.
Yes
No
Where can I obtain more information regarding IRS reporting requirements?
For more information regarding federally mandated IRS reporting requirements, visit http://www.irs.gov or http://www.irs.gov/pub/irs-news/reg-139255-08.pdf.
1099-K Program Best Practices updated as of March 2021.
