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Regulatory Affairs
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IRS Releases Final Info Reporting Rules |
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The Internal Revenue Service Aug. 13 released final rules (T.D. 9496) relating to information reporting requirements, information reporting penalties, and backup withholding requirements for payment card and third-party network transactions.
IRS said the final regulations implement tax code Section 6050W and related statutory changes enacted by the Housing Assistance Tax Act of 2008 (Pub. L. No. 110-289) that require payment settlement organizations to report payments in settlement of payment card and third-party network transactions for each calendar year.
The final regulations provide guidance to assist persons required to report payment card and third-party network transactions and to the payees of those transactions, IRS said.
These regulations are effective Aug. 16, the same day they will be published in the Federal Register. Text of T.D. 9496 is available at http://www.ofr.gov/OFRUpload/OFRData/2010-20200_PI.pdf. |
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Change in Credit Card Rules May Create Wave of Declines |
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On the heels of rule changes last year that limited overdraft fees on debit transactions and increased the number of declined debit transactions, new regulations will go into force on Monday, February 22, that will likely create a new surge of declines at the point of sale.
The new rules prohibit credit card issuers from charging over-limit fees to consumers who haven't agreed to them in advance. That leaves issuers with no recourse but to decline transactions.
For a detailed rundown on the changes taking effect on February 22, click here or here . |
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IRS Releases Draft Rule for 6050W Merchant Reporting Requirement |
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The Internal Revenue Service (IRS) issued proposed regulations Nov. 23 requiring that, starting with transactions in calendar year 2011, the gross amount of payment card and third-party network transactions be reported annually to participating merchants and the IRS. The Housing and Economic Recovery Act of 2008 created a new reporting requirement for members of the electronic payments industry. The new law requires banks and other payment settlement entities to report payment card and third-party network transactions with their participating merchants.
These proposed regulations contain rules to implement reporting of credit card, debit card and similar transactions, as well as transactions settled through third-party payment networks, such as third-party organizations that settle online transactions. The IRS also released for comment a draft version of new Form 1099K, Merchant Card and Third-Party Payments, which will be used to make these reports. Form 1099-K is similar to the existing Forms 1099 used to report interest, dividends and other payments. The first information return covering calendar year 2011 must be filed with the IRS and furnished to participating merchants in early 2012. Among other things, the proposed regulations describe who is required to file a return and which payment card and third-party network transactions are subject to the reporting requirement. The proposed regulations also provide examples. |
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Fed Proposes Prepaid Card Rules |
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The Federal Reserve Board on Monday announced proposed rules that would restrict the fees and expiration dates that may apply to gift cards. The rules would protect consumers from certain unexpected costs and would require that gift card terms and conditions be clearly stated
The proposed rules would prohibit dormancy, inactivity, and service fees on gift cards unless: (1) there has been at least one year of inactivity on the certificate or card; (2) no more than one such fee is charged per month; and (3) the consumer is given clear and conspicuous disclosures about the fees. Expiration dates for funds underlying gift cards must be at least five years after the date of issuance, or five years after the date when funds were last loaded
The Board's proposed rules generally cover retail gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and network-branded gift cards, which are redeemable at any merchant that accepts the card brand
The proposed rules are issued under Regulation E (Electronic Fund Transfers) to implement the gift card provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009
The Board's notice is attached. Comments on the proposal must be submitted within 30 days after publication in the Federal Register, which is expected shortly. Highlights of the rules proposal. |
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