William Byrnes' Tax, Wealth, and Risk Intelligence

Why is this Topic Important to Wealth Managers?  Provides critical information in regards to who will be the subjects of new reports going to the IRS beginning in January.  Chances are, a significant portion of clients accept credit and debit cards in transactional exchanges.  The new law applies, and has ramifications, directly related to these merchants and services providers.

The same legislation that brought us the first time homebuyer’s credit, the “Housing Assistance Tax Act of 2008”, is back again, this time in the form of additional reporting for those who accept credit or debit cards in consideration for goods or services. [1] The act requires return reporting to the Internal Revenue Service, “relating to payments made in settlement of payment card and third party network transactions.”  [2]

The requirements establish that “banks or other organizations that have contractual obligation to make payment to participating payees in settlement of payment card transactions” [3], are required to return to the Service, “(1) the name, address, and [Taxpayer Identification Number] of each participating payee to whom one or more payments in settlement of reportable payment transactions are made, and (2) the gross amount of the reportable payment transactions with respect to each such participating payee.” [4]

Read all about the new requirements that become effective for information returns for reportable payment transactions for calendar years beginning after December 31, 2010 at Special Alert