 |
 |
||
 |
 |
||
|
|||
|
|
Tax Announcements Reporting Requirements for Payment Card and Third Party Network Transactions - New for 2011. Code Section 6050W now requires information returns by certain entities ("payment settlement entities") that make payments to settle "payment card transactions" and "third party payment network transactions." Payment card transactions (also known as merchant card transactions) involve credit cards, debit cards, and "stored-value" (gift) cards that are issued by a third party. They do not include credit cards or gift cards issued directly by a merchant. A third-party network transaction involves a third-party settlement organization, such as Pay-Pal, that makes payments to a vendor of goods or services. For a merchant card transaction, the payment settlement entity is known as a merchant acquiring entity (or merchant acquiring bank). It is the organization that is obligated to pay funds to the merchant/payee to settle the payment card transaction. It is not the bank that issued the credit or debit card. The issuing bank indicates to the merchant acquiring bank whether the customer has funds in his or her account; the latter gives instructions to pay funds to the merchant. Payments made to settle payment card transactions must be reported to the IRS and to the payee (merchant). Payments made to settle third-party network transactions must be reported only if gross payments to a single payee exceed $20,000 and the number of transactions with the payee exceeds 200. The information must be reported on new Form 1099-K, Merchant Card and Third Party Network Payments. The first Forms 1099-K are due for calendar year 2011 and must be submitted in 2012. For more details, also see www.irs.gov website. If you have any questions, please contact our office. Also see: Why Choose Us | Industries | Contact Us |
|
___________
|
