IRS Moves to Grab Your Money
Pssssst! Hey business owners, do you know about Backup Withholding? No? What about TIN Mismatch? No, hmmmmm. That's a problem we need to fix right now!
Way back with the Housing and Recovery Act of 2008, Congress tacked on Amendment 6050W, Merchant Tax Reporting. Innocently, the Amendment was added to encourage accurate sales tax reporting.
What's the Big Problem Here?
The subtext here is the IRS has another way to ensure merchants are sharing their rightful piece of action by having credit card processing companies report your sales directly to them. In addition, the merchant service providers must collect and validate your business's Taxpayer Identification Number (TIN) along with submitting your gross payments processed by credit or debit cards.
Then, if your gross sales figures don't jive with the numbers received from the credit card processor, they flag the error for closer inspection. And, if your gross sales or TIN doesn't match, along comes the automatic 28 percent backup withholding deduction from their merchant account deposits. While this can be rectified by aligning your sales numbers accurately and/or providing a matching TIN with your merchant processing provider and IRS, it will take months to unlock your money and get it back to you. Without interest, naturally.
Protect Your Business and Your Money!
This Amendment went into effect in October 2014 but few have heard of it, although it is likely that many businesses have been affected by it. It is the merchant services provider's responsibility to report gross sales revenues and TINs for its clients under the Amendment.
However, it is YOUR responsibility to ensure that your merchant services provider has the correct, full legal name of your business, your address and TIN so they can accurately report to the IRS. If your credit card processor does not have your accurate contact information and TIN, you will have your revenue withheld. Your business is penalized.
If you receive any notification about a TIN mismatch, do not ignore it. The notification may come from your processor and could arrive in the inbox, mailbox, fax or telephone.
To check on what information your credit card processor has on file, contact them immediately to confirm what they are reporting. If they aren't aware of this issue or cannot help you, find a new merchant services processor posthaste.
To learn more about Amendment 6050W, or about credit card processing services that put your business in front of your competition, contact SalesSensePayments.com or call (305) 723-1234 today.