Yesterday afternoon in a welcome bit of news the IRS announced that they are delaying the requirement to begin backup withholding for merchant service providers until 2014.
Backup withholding is a penalty the IRS submits to merchants that have an or incorrect TAX Identification Numbers (TIN) on file with their credit card processor. If the TIN on file with the processor didn't match what was on file at the IRS the processing company would be ordered to withhold 28 percent of the merchant's credit card volume. This would continue until the merchant filed a return that the IRS judged to have a TIN that matched what was on file at the processors.
The postponement is terrific news for merchants and their payment card processors. The policy has already created a blizzard of new paperwork for the processing companies. And with withholding scheduled to begin in a few months the inevitable results were going to be: merchants furious with their processing companies, even though the processors hands were tied in the matter; and further hardship on businesses already struggling to keep their doors open. We should all breath a sigh of relief that's been postponed.
However, it's critical that merchants not overreact become lax with respect to filing correct TINs. The IRS delayed backup withholding for one year but it is still going to come next year. And the match on file next year will be based on the 1099 that is filed in January 2014- only a few months away.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment