Academic journal article Journal of Accountancy

Penalty Relief Given, Backup Withholding Delayed for Payment Card Reporting

Academic journal article Journal of Accountancy

Penalty Relief Given, Backup Withholding Delayed for Payment Card Reporting

Article excerpt

In Notice 2011-88, the IRS postponed for a year the effective date of the backup withholding requirement for payments in settlement of payment card and third-party network transactions that are subject to reporting under Sec. 6050W (Sec. 6050W payments). Under the notice, backup withholding will now apply only to such payments made after Dec. 31, 2012. The Service also created an FAQ Web page (tinyurl.com/ 67knpth) explaining the new requirements.

The IRS also issued Notice 2011-89, which provides transitional relief from penalties under Secs. 6721 and 6722 for incorrect or incomplete information on information returns and payee statements required under Sec. 6050W.

Sec. 6050W requires any "payment settlement entity" to file annual information returns and payee statements reporting credit card or other payment card transactions and third-party network transactions. The requirement applies to payment settlement entities with respect to each payee to which the entity makes more than 200 payments during a calendar year having a gross aggregate total of more than $20,000. …

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