The Green Sheet Online Edition
November 14, 2011 • Issue 11:11:01
TIN matching simplified
The Jan. 1, 2012, deadline looms for businesses to report taxpayer identification numbers (TINs) and legal business names to acquiring banks or payment settlement entities.
Under IRS section 6050W, a requirement contained in The Housing and Economic Recovery Act of 2008, payment processors must have valid TINs and business names for all merchants serviced in tax year 2011, and then file 1099-K forms reporting gross payment card transactions.
In July 2011, merchant data security solutions provider SecurityMetrics Inc. introduced a TIN Matching Service to accommodate ISO compliance with the new federal requirements. The service has reportedly helped scores of payment processors recover and match millions of merchant TINs and legal business names not yet validated with IRS records.
Along with the burden of reporting merchant income shifting to acquirers, section 6050W also requires that all business records match IRS records. If business information is not verified properly, up to 28 percent of future payment card transactions can be withheld by the acquiring entity until the information is corrected.
(The IRS recently granted a one-year reprieve for withholding funds and for levying penalties because of erroneous information submitted on 1099-K forms, but reporting must go on as originally mandated.)
Designed for processors and ISOs that do not have the resources to effectively and completely validate each merchant in their portfolios, SecurityMetrics can simplify the process.
"We've worked with acquirers whose merchant TIN validations are 15 to 90 percent complete," SecurityMetrics Chief Executive Officer Brad Caldwell said. "The law requires 100 percent. Most merchant businesses can't financially handle the federally mandated 28 percent withholding of all card revenues.
"The SecurityMetrics TIN Matching Service is designed to alleviate the pressure of reaching out to an entire portfolio and makes the IRS TIN validation process easy for any acquirer to implement."
SecurityMetrics' TIN Matching Service offers:
- Real-time status reporting: Merchant acquirers can view TIN data validation progress for either a single merchant or the entire portfolio via SecurityMetrics' online Merchant Compliance Console.
- Flexible communication: The SecurityMetrics Communications Platform sends customized email and fax messages to merchants, with call center follow-up notifications to prompt merchants to respond.
- Instant merchant validation: Merchants have the option of validating or inputting TIN information online or through the call center.
- Extensive data collection: Beyond the required TIN data, SecurityMetrics also collects email, fax and address information to ensure merchant databases are accurate.
Having a reliable ally in generating correct and timely TIN reporting could be the perfect New Year's resolution for ISOs seeking to reduce merchant attrition and meet federal annual reporting mandates in 2012 and beyond.
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