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Avoid Potential Penalties From the IRS—Update Your Tax Information
Lawyers who accept debit and credit card payments from clients need to be aware of a recent IRS regulation scheduled to take effect January 1, 2013, which has the potential to adversely impact client trust accounts if certain precautions are not taken before January 1, 2013.
Section 6050W was added to the Tax Code in January 2012, requiring credit card processing companies to verify and match your federal tax identification number and legal name on your merchant account to IRS records (Form 1099-K). An EXACT match is required. If you have either abbreviated your name or used an acronym for your merchant account, you will need to contact your credit card processor to assure that your legal name on your merchant account exactly matches the legal name you use to file your tax returns.
If there is NOT an exact match between the information provided to the credit card processing company and the information on file with the IRS, there are serious consequences:
If a mismatch occurred, you should have already received notice from your credit card processing company of the problem. However, there is no certainty that all processing companies have provided such notice. Don't wait for your credit card processor to contact you!
It is important that you take the following actions before January 1, 2013:
Thanks to the Illinois Attorney Registration and Disciplinary Commission for authoring this notice.
Member Advisory is an electronic publication of the State Bar of Michigan.
State Bar of Michigan