Required tax information
IRS Reporting Regulations for Payment Processors
A new requirement was enacted by the Housing Assistance Tax Act of 2008. The Act added a new section of the Internal Revenue Code (§6050W) that requires merchant acquiring entities to report gross amounts of payment transactions to the IRS for their merchants starting in 2011. The IRS issued an implementing regulation that became final in August 2010.
Under this new mandate, Google Payments must file Form 1099-K for sellers who receive over $20,000 in gross sales AND over 200 payment transactions through Google Payments for calendar year 2011.
As a result of these reporting requirements, Google Payments must have complete and accurate tax information for all sellers using the Google Payments service. The specific tax information we are required to obtain includes your legal business name and your corresponding Taxpayer Identification Number (TIN). A TIN can either be your Employer Identification Number (EIN) or your Social Security Number (SSN), depending on how you have registered with the IRS.
Tax Identification Number (TIN)
A Tax Identification Number (TIN) is a term used by the IRS to refer to either your Employer Identification Number (EIN) or Social Security Number (SSN). You can provide either your EIN or SSN to Google Payments, along with the associated registered name. Whether you provide Google with your EIN or SSN depends on how you have registered with the IRS.
If we fail to receive complete and accurate tax information, we will withhold any further payments to your account. If your payments have been suspended, please resubmit your correct tax information in order to resume payments.
Submit your TIN
You can submit your TIN at any time. Here's how:
- Sign in to your account.
- Click the Settings tab.
- Click the Financials link on the left.
- Enter your information.(EIN or SSN) and your Legal Name (Name shown on your income tax return).
- Click Save financials to submit your tax information.
Social Security Number (SSN) or Employer Identification Number (EIN)
Whether you enter your SSN or EIN depends on how you have registered with the IRS.
Social Security Number (SSN)
If you are an individual or sole proprietor and file your tax return using your Social Security Number (SSN), then you need to use your Social Security Number (SSN) when updating your Google Payments merchant account. This is important so that our merchant account records match what you have on file with the IRS.
Employer Identification Number (EIN)
For Corporations, Partnerships, or LLCs, then you should provide the federal Employer Identification Number (EIN) when updating your Google Payments merchant account, as well as the name you have on file because it must match what you report to the IRS.
Legal Business Name
Google Payments needs you to provide the exact business name you have registered with the IRS. Please ensure you've provided the exact legal business name you have registered with the IRS by signing in to view or update your business name that's registered with Google Payments.
Payments from outside the U.S.
The IRS regulation applies to all payments, regardless of where the buyer is located.
Transaction Amount Calculation for IRS Reporting
The IRS regulation requires reporting the total or gross sales payment amount of transactions, without adjustment for refunds, chargebacks, or adjustments.
Regulated Forms of Payment
All payment methods currently supported by Google Payments are affected by regulation 6050W.
Frequently Asked Questions
How is the threshold calculated?
The IRS regulation requires reporting the total or gross sales amount and gross number of transactions, without adjustment for refunds, chargebacks, or adjustments.
Will I receive a copy of the Form 1099-K if I only meet one of the thresholds?
No, a seller will only receive a copy of the Form 1099-K if they meet both thresholds.
How will I receive a copy of the Form 1099-K?
If your gross sales exceed $20,000 and transactions exceed 200 transactions in a calendar year, a copy of Form 1099-K will be sent through postal mail on January 31, 2012
What if I don't provide my TIN or provide an inaccurate TIN?
If you don't provide the required information and certify that it's accurate, Google Payments may take a range of actions including withholding payments and suspending processing of transactions.
How does this affect international sellers?
IRS requires that international sellers who process sales in the US must provide a Form W-8BEN in order to be exempt from US tax reporting requirements. International sellers who meet these requirements will be contacted individually by Google Payments on how to report this information. For more information about the W-8BEN, please visit http://www.irs.gov/formspubs/.
How can I submit tax-related questions regarding Form 1099-K?
If you have additional questions related to this new IRS requirement, please email firstname.lastname@example.org. However, we cannot provide tax advice, so we recommend consulting your tax advisor if you have questions about how this new regulation may affect you.