The Internal Revenue Code (IRC) has done it again!
With the addition of Section 6050W to IRS, the IRC has made it mandatory for all US payment settlement entities (PSE), including online payment processors, to provide information to the IRS about those of their customers who receive payments through them by selling goods or services.
Under the section, the PSE are required to report to the IRS the total payment volume received by the US account holders whose payments exceed these two parameters in a calendar year: US$20,000 in gross payment volume from sales of goods or services in a single year 200 separate payments for goods or services in the same year.
The account holders have to provide their respective payment processors with their tax ID number. In accordance with the given tax ID number (SSN, EIN, TIN), the PSE will send the affected sellers the form 1099-K to fill. So, in a nutshell, all an e-payment processor has to do is ask for the seller’s tax id and provide them with the 1099-K form. Sounds simple, doesn’t it?
Well no. It may sound simple, but that’s not all the payment processors have to worry about. The biggest hurdle comes when the form filler makes mistakes, which in turn affect these PSE companies.
Even a single, little mistake done by the filler can land these credit card processors in the faulty list. The IRS will issue a summons to the “faulty” payment processor at audit and had to pay thousands of dollars in penalties.
So what to do now?
The best solution to overcome this issue is to get TIN matching software. A TIN matching API like ours will provide you with services like TIN matching, 1099 validation, business EIN credit reports, TIN batching, Due Diligence, B2B EIN verification, anti-fraud software too. If you are an e-payment processor, then you must use an up-to-date, speedy and secure TIN matching system like our TIN matching API. Our service will make the e-payment processing companies more IRS compliant and will save them from penalties.
Nor this will help you in the present scenario; it will also come handy in the nearby future when IRS will throw another rule in your way.