As you are already aware, Electronic Merchant Systems EMS remains committed to both you and your business – making sure that you continually receive pertinent and timely information as well as top notch care and support as we continue our partnership. It is with this in mind that we’ve created this page.
Under recently enacted federal law, Section 6050W of the U.S. Internal Revenue Code requires all “merchant acquiring entities,” including Electronic Merchant Systems to report the gross amount of each merchant’s payment card transactions on Form 1099-K to the Internal Revenue Service (IRS) annually. This reporting requirement began January 1, 2011.
Electronic Merchant Systems is committed to complying with this law and to assisting in verifying your business information. We participate in the IRS’ Name and Taxpayer Identification Number (TIN) Matching program to help ensure the combination of business Legal Name and/or TIN we have on record match information on file with the IRS.
Failure to update your records may result in an IRS-imposed 28% federal backup withholding applied to your settlement payments.
Please review the FAQs below to better understand the new law and its’ effect.
Frequently Asked Questions
What is IRS 6050W?
IRS 6050W describes new reporting requirements from the IRS. Under 6050W, Electronic Merchant Systems, as well as other payment processors, will be required to report the total gross sales volume of our merchants' payment card transactions to the IRS. The new requirement took effect on January 1, 2011. The first reports will start going to the IRS in early 2012. As part of the new IRS mandate, Electronic Merchant Systems 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.
When do the IRS changes go into effect?
IRS 6050W covers all transactions in the tax year 2011, and each tax year that follows. Beginning in January 2012, merchants will receive a 1099-K form by mail. Transactions occurring prior to 2011 will not be affected by this legislation.
Will all merchants receive 1099-K forms?
Yes. 1099-K forms will be mailed by January 31, 2012.
What does Electronic Merchant Systems need from a merchant as a result of the IRS changes?
Electronic Merchant Systems will be asking impacted merchants to update their accounts by verifying that their TIN (or SSN), and Tax Filing Name matches what the IRS has on file for their businesses.TIN = Tax Identification NumberSSN = Social Security Number
What happens if my account information doesn’t match what the IRS has on file?
If a merchants account information does not match what the IRS has on file for your business, Electronic Merchant Systems will 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.
Are non-profit organizations affected by the new IRS Tax Law 6050W?
Yes. Non-profits will be required to verify that their TIN (or SSN) and Tax Filing Name matches what the IRS has on file. And we are required to report their information to the IRS.
What types of card transactions are included?
All credit, signature debit, pin debit, electronic bank transfer (EBT), and certain gift card transactions are included in this mandate.
What is the Business Legal Name?
The Business Legal Name should be the same business name that a merchant provided to the IRS when applying for their Taxpayer Identification Number (TIN). The Business Legal Name is the Tax Filing name; the name they use when they file thier business’ taxes with the IRS.
How does a merchant find out what the IRS has on file for their Business Legal Name and TIN?
Refer to your last tax return for your business, or contact your tax professional.
Once completed, how do I submit my W9 to EMS?
You can return your correctly completed W9 one of two ways. You can fax it to 216.674.3106 or mail it to Electronic Merchant SystemsAttn: TIN Matching5005 Rockside Rd #PH100Independence, OH 44131