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IRS Gives Penalty Relief, Delays Backup Withholding for Payment Card Reporting - Emil Estafanous, CPA : Emil Estafanous, CPA

IRS Gives Penalty Relief, Delays Backup Withholding for Payment Card Reporting

The IRS deferred for a year a effective date of a backup self-denial requirement for payments in allotment of remuneration label and third-party network transactions. The Service also combined an FAQ page explaining a new requirements.

The postponement, in Notice 2011-88, relates to exchange theme to stating underneath Sec. 6050W and associated backup self-denial underneath Sec. 3406. Under a notice, backup self-denial will now request usually to such payments done after Dec 31, 2012.

The IRS also released Notice 2011-89, that provides transitory service from penalties underneath Secs. 6721 and 6722 for improper or deficient information on information earnings (Form 1099-K) and payee statements compulsory underneath Sec. 6050W.

Sec. 6050W requires any “payment allotment entity” to record annual information earnings and payee statements stating credit label or other remuneration label exchange and third-party network transactions. The requirement relates to remuneration allotment entities with honour to any payee to that a entity creates some-more than 200 payments during a calendar year carrying a sum sum sum of some-more than $20,000. The sum (with monthly subtotals) contingency be reported on Form 1099-K, Merchant Card and Third Party Network Payments (which is still accessible usually in breeze form for 2011).

The IRS pronounced in a notice it offering a chastisement service “to yield additional time to rise suitable procedures for correspondence with these new stating requirements,” observant that penalties could still request for unwell to record an information lapse or payee statement, including Form 1099-K. Reporting entities still contingency record and emanate a forms commencement in early 2012 and make good-faith efforts to yield accurate information on them.

Sec. 3406 requires backup self-denial (currently 28%) if a payee fails to allow a scold taxpayer marker series (TIN) or a payer has been told by a IRS that a payee has formerly underreported seductiveness or division income. Payers, however, can use a TIN relating procedures of Rev. Proc. 2003-9 (see Announcement 2009-6).

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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