Taxes and your Merchant Account

Tax Code Updates
In 2011, the Internal Revenue Service implemented Section 6050w of the tax code requiring 1099-K reporting of information from credit, debit, and other electronic payment methods. Beginning in 2013, merchants were required to file 1099-K’s to avoid fines and penalties for non-compliance.

If your business processes credit cards, you will receive either a 1099-K every January or a fine from your credit card processing company stating that your information was reported incorrectly.
Processors and merchants alike must focus on collecting correct information.

Understanding your 1099-K form:
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1099-K form:
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Penalties
For merchants, incorrectly-filed 1099-Ks will be returned with a B-Notice, a minimum $100 fine, and a maximum penalty of up to $1.5 million (depending on the size of the business).

Additionally, any merchant who does not file the correct information is subject to backup withholding, meaning that the acquirer that filed the 1099-K must withhold a percentage of that merchant’s income until when the tax information can be amended/corrected.

NMA strives for complete accuracy with all of our our merchants, ensuring IRS compliance and profitable business practices!