Home > Features > Online Billing: Be Aware of New Tax Rules • Bookmark   • Newsletters   • Register Search Options

FEATURE

Online Billing: Be Aware of New Tax Rules

Online Billing: Be Aware of New Tax Rules

May 1, 2011
Text size: 
View in Digital Mag
Get XBIZ News
XBIZ Research
Will virtual reality boost the paysite market?
Yes, it will soon
  39.66%
Yes, but in a few years
  36.87%
No
  23.46%
Out of 179 votes. Results based on votes submitted by members of XBIZ.net social network.

" These new reporting requirements are an example of a widespread obligation placed on acquirers as a result of legislative action. "

During the billing panel at the XBIZ Conference in LA earlier this month, I spoke about a new tax-reporting requirement for merchants that we all need to be aware of and prepare for in the payment community.

As part of the Housing Assistance Tax Act of 2008, which was added to IRS Code Section 6050W, all acquiring institutions are required to report the gross amount of payment card and third party network transactions processed annually to both participating merchants and the IRS beginning with the 2011 calendar year.

These new requirements place a great deal of responsibility on merchant service providers and other acquiring institutions to provide accurate and timely information to their merchants and the IRS. The IRS has developed a 1099K form, which acquirers and merchants will utilize for reporting purposes to the IRS. The initial submission of these 1099K forms will occur in early 2012, as part of the reporting for the 2011 tax year. Additionally, the information provided to the IRS is required to be submitted with accurate taxpayer name and Taxpayer Identification Number (TIN) information. If there is a discrepancy in the taxpayer name/TIN combination, the IRS may subject the merchant to possible withholdings and penalties. To facilitate the process, the IRS has developed an Online TIN Matching Program, which may help acquirers in matching of taxpayer name and TIN data for 1099K submissions. This particular requirement is vastly different from the recently repealed 1099 reporting requirement which requires small business owners to file an IRS form each time they make a purchase of $600 or more from a vendor, as part of The Patient Protection and Affordable Care Act of 2010.

Various merchant processing entities and third-party software application vendors are already developing solutions to assist acquirers and merchants with this new legal requirements. These solutions include reporting for the annual gross sales data for each merchant, as well as working with the IRS Online TIN Matching Program to complete accurate 1099K forms for submission to the IRS. Additionally, these services may eventually allow for the electronic submission of the 1099K forms to the IRS, as well as the distribution of copies of this information to merchants. As 2011 progresses, these solutions will become of great interest to acquiring institutions as they embark on the process of the 1099K forms submissions in early 2012.

These new reporting requirements are an example of a widespread obligation placed on acquirers as a result of legislative action. In order to fulfill these obligations, acquiring institutions will invest quite a bit of money along with many hours of manpower into these reporting solutions to assist their merchants. It will certainly be interesting to see how the farreaching implications of legislative action affect the payment card industry as a whole in the very near future.

Steven H. Bryson is chairman of OrbitalPay LLC and Global Electronic Technology Inc. (GET).


EDUCATIONAL FEATURES

E-Stim Basics: Selling Customers on Powerboxes as Pleasure Tools

Electrosex is a commonly misunderstood pleasure practice for good reason: Most of us have negative associations with electricity; maybe we’ve been shocked after rubbing our feet across a carpeted... More »

Search Oftentimes Is Left to Chance

Adult content is frowned upon in search, whether in paid, organic or social. With the big algo updates from the past few years, Google has cleaned up search, trying to get rid of spammy and low-quality... More »

Five Tips to Generate Repeat Business

A $50 sale is great. But what if you could get that same $50 sale to come back four times in the next few months? Here are some ideas how to achieve that. 1) On your receipts, you should have an option... More »
XBIZ NEWSLETTERS
Stay informed of the latest industry developments. Get XBIZ newsletters delivered to your inbox. Subscribe today!
Enter email address:

* To manage existing subscriptions click here.






POPULAR PRODUCTS & SERVICES
Submit your press release to
multiple news outlets with 1 click.
Subscribe to RSS news feeds or
add free content to your website.
Access XBIZ news and articles
with your mobile device.
Subscribe to XBIZ World magazine, the industry's leading e-commerce trade publication, delivering in-depth coverage of the online, mobile and ancillary digital markets.

UPCOMING EVENTS

Everything To Do With Sex Show

Jan 27 - Jan 29
Halifax, Nova Scotia

The European Summit

Mar 04 - Mar 07
Barcelona-Sitges, Spain

The TEA Show

Mar 05 - Mar 06
Hollywood, CA

Phoenix Forum 2017

Mar 23 - Mar 26
Tempe, Arizona
Everyday thousands of business professionals browse XBIZ's industry directory for quality products and services. Not listed yet? Your company could be losing potential new business. Submit your company today!
Use XBIZ RSS feeds to stay informed of the latest industry developments or as a content syndication tool for your website!