The new IRC section 6050W means the end of organizations' 1099 reporting requirements for card transactions (because the new requirements for merchant acquirers basically duplicates the end-users' reporting).
To eliminate a reporting duplication, the final regulations (released mid-August) state that card transactions reportable under both IRC section 6041 (by end-user organizations) and 6050W (by the acquiring community) are reportable only under 6050W effective 2011. This relief for end-user organizations applies to card payments only.
The final regulations do not, however, eliminate the requirements within IRS section 3402(t) for federal, state and large local governments to report all payments (through any payment method) and withhold 3% for each, beginning for payments made in 2012.
Members, click hereto access a complete summary of the upcoming changes to 1099 reporting requirements and a copy of the final regulations.
says... Posted Wednesday, December 8, 2010
In December 2010, IRS Notice 2010-91 states that government agencies will not have to report and backup withhold on card payments in 2012 under section 3402(t). This change is great news for card programs, as 1099 reporting will no longer apply beginning 2011. However, other payments (e.g., checks, ACH) will still be subject to the requirements.