Relief Provisions and FAQs on IRC Section 6050W Payments
The IRS is providing special transitional relief to banks and other payment settlement entities required to begin reporting payment card and third-party network transactions to the IRS on new Form 1099-K. By law, reporting is scheduled to begin in early 2012 for payment card and third-party network transactions that occurred in 2011.
Notice 2011-88 postpones backup withholding requirements on Section 6050W payments for one year. The requirement for backup withholding is now applicable to payments made after December 31, 2012. The delay is provided to allow additional time to develop withholding systems and gain familiarity with withholding procedures and the IRS TIN matching program.
Notice 2011-89 provides relief from penalties for good faith filers of incorrect 1099-K and/or related payee statement information. The penalty relief does not apply to failures to file.
IRC Section 6050W FAQs were released to lay out basic definitions and requirements in the form of some 30 questions and answers. If you’re still trying to figure out some of the ins and outs of this complicated area, these FAQs may be just what you’ve been looking for. Issued earlier this year, these FAQs have been updated to include the two IRS Notices listed above.