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Merchant Store

IRS Reporting Requirement Update


Introduction & Overview
The Housing and Economic Recovery Act of 2008 is a new federal regulation that requires "merchant acquiring entities" to report the gross amounts of their merchant customers' electronic payment transactions to the IRS. These new requirements will apply to transactions beginning on January 1, 2011, with required reporting and tax withholding to begin in 2012. All merchant acquiring entities must collect and verify the Tax Identification Number (TIN) and associated legal business name and address for each of their merchants on file.

Your processor is a merchant acquiring entity .

Requirements & Implications
The new reporting law - which was opposed by business associations, banks, and industry associations before it was ultimately signed into law - also requires the Reporting Entity to collect and verify each merchant's Tax Identification Number (TIN) and the legal business name and address associated with that number.

If you fail to provide your Processor with your TIN, or if there is a discrepancy between your TIN and the legal business name in The Reporting Entity's records and the IRS' records, you will be subjected to IRS mandated backup withholdings. This withholding provision goes into effect for transactions starting in 2012 (unlike the reporting provisions of the legislation, which apply to transactions beginning on January 1, 2011).


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