The Internal Revenue Service is aiming to clear up uncertainty about new rules requiring payment processors and merchant acquirers to report certain data to the agency.
The IRS expects to release a document of frequently asked questions in the next few months clarifying final rules that took effect on Jan. 1, Paula D. Porpilia, principal at TIN Compliance Consultants in Great Cacapon, W.Va., said Tuesday at the Southeast Acquirers' Association's 10th annual conference, in Weston, Fla.
Signed into law in 2008, the IRS reporting measure is designed to ensure merchants report all of their sales for proper tax collection. The legislation covers credit, debit and gift card and automated clearing house transactions.
"Acquirers, processors, [independent sales organizations] and many merchants have been aware of these new rules for a few years, but only now that the law has gone into effect are they are finally taking a closer look and discovering they aren't completely up to speed on it," Porpilia said. "This is causing a lot of questions to surface, and the IRS is compiling some answers."
The rules require merchants and acquirers to report merchants' gross transaction amounts for each calendar year, but they cannot charge customers separately for performing this service, Porpilia said. The task of gathering and reporting the gross amount of transactions made to each merchant has proven troublesome, she said.
An acquirer's "pricing model," for example, could include the cost of delivering a merchant's gross transactions for the year, but it cannot be a separate line-item charge to the merchant, Porpilia said.
Another obstacle that acquirers and processors face in complying with the new IRS rules is adjusting systems and business models to track merchant transactions for a longer period of time, Porpilia said.
Further specifics about this rule and others will likely be among the clarifications the IRS plans to issue, Porpilia said.
"The rules were finalized and issued, and anyone can see them online. But there are a lot of complexities and gray areas that are still causing people confusion, and hopefully these will be further clarified," she said.
