Merchant Warehouse Inc. has found a way to help clear up identification discrepancies that interfere with new Internal Revenue Service reporting requirements.
When merchants call the Boston-based ISO, a computer program matches the caller’s phone number with the company database. If problems exit in the ISO’s database entry, a window pops up to alert the customer-service representative, Henry Helgeson, Merchant Warehouse co-CEO, tells ISO&Agent Weekly.
While resolving the problem or answering the question that prompted the merchant’s call, the rep can also verify the spelling of the merchant’s company name and tax identification number, or TIN, Helgeson says.
The names and numbers in the ISO’s database must match to the letter or number with IRS records in order for the ISO to report the merchant’s transactions to the IRS.
Beginning with the 2011 tax year, acquirers are compelled to report all of their merchants’ transactions to help the IRS eliminate erroneous or fraudulent income-tax forms.
Mismatched names and incorrect TINs have created major problems for ISOs struggling to comply with the reporting law, which was signed into law in 2008.
If an ISO records a company name as “Bill Jones Auto Sales,” for example, and the IRS records show it as “William Jones Auto Sales,” the ISO has to correct the situation, analysts say.
Using the system to alert reps of such problems goes beyond the email messages and direct-mail pieces many ISOs are relying on to correct mismatches, Helgeson says.
Telephoning merchants to verify the information does not work well because most Americans have become reluctant to provide names and social security numbers to callers in the wake of telephone scams and computer breaches, he says.
Of Merchant Warehouse’s 70,000 merchants, between 30% and 40% have mismatched information, Helgeson says. So far, the company has reconciled about 60% of the problems, he notes.
“We still have a mess on our hands,” he says, adding that “most ISOs are in the same boat.”
