In response to complaints about problems implementing a new federal law requiring acquirers to report merchants’ electronic payment transactions, the Internal Revenue Service delayed the penalty provisions and withholding requirements for a year, until Jan. 1, 2013. All acquirers are still required to file the 1099-K reporting form by the end of the year.

Beginning January 2013, First Data and Global will be instructed to withhold funds from merchants whose Tax Id Number (TIN) and Tax Filing Name (TFN) do not match. Once funds are withheld, First Data and Global will send them directly to the IRS. Merchants will not be able to retrieve their withheld money until they file their tax return for 2013. California and Maine are also imposing State Withholding amounts.

In order for merchants to avoid withholding, they need to update their TIN and/or TFN if they receive notification that their information does not match. Recently, First Data sent letters on our behalf notifying merchants of their unmatched status. Global merchants will be receiving notification directly from us shortly.