On October 27, 2011, the IRS announced that backup withholding will be postponed for one year. Backup withholding will be applied to amounts paid after 12/31/2012. The penalty relief will not, however, extend to entities that fail to file or make no effort to file 2011 Forms 1099-K as required.
Bottom line: If your IRS TIN does not match your merchant account information, then you could be subject to penalties.
“First Data continues to review State regulations related to Section 6050W backup withholding. Based on our research to date, we currently believe that the backup withholding delay will apply to both Federal and State. As a result, First Data is in the process of adjusting our project timelines to support backup withholding for missing / invalid TINs as of January 1, 2013. Although the delay impacts activation of backup withholding processes, development efforts continue for timely implementation.
We are in the process of researching IRS plans for the CP2100 process, expected for the Fall of 2012. Once we have additional details we will notify you.
The above announced changes do not impact our client’s responsibility to obtain valid Tax Filing Names and Tax Identification Numbers from their merchants as applicable. This information is required to ensure accurate filing of the form 1099-K reporting to the merchants and the IRS.”
Related article, Jan. 1, 2011 Deadline for credit processing reporting to IRS looms.