IRS TIN Mismatch

Federal Housing Assistance Tax Act

Section 6050 W (IRS Reporting)

In January 2011, the IRS enacted section 6050W. This IRS mandate requires all merchant service providers to validate the legal name and Tax Identification Number (TIN) for every merchant in their portfolio, and report to the IRS all annual revenues associated with these accounts.

To comply with this government mandate,
CynergyData Texas is required to:

  • Submit to the IRS the legal business names and tax ID numbers for all of our merchants, and ensure that these records match those in the IRS database.
  • File a return with the IRS In January of each year.
  • Provide all merchants who accept electronic payments an annual 1099-K form reporting their monthly and annual gross sales income during the previous calendar year.
  • Withhold income tax (currently up to 31%) from the gross sales amounts of merchants whose TIN records do not match IRS records. After careful review and analysis, CynergyData Texas has created a Regulatory Program designed to meet and exceed these requirements, ensuring that our valued customers remain compliant and free from unnecessary withholding while, at the same time, requiring the least possible demands on your busy schedules.

The components of this program are as follows:

TIN Matching

  • CynergyData Texas will annually submit to the IRS the legal business names and tax ID numbers (TINs) of all our merchants.
  • Merchants with unmatched records will receive notification with instructions for correcting the missing or mismatched information, and a timeframe to correct/update this information to avoid penalty fines.
  • As merchants update and correct unmatched TIN information, CynergyData Texas will continually submit this information to the IRS until the correct information is validated.

IRS Reporting

  • In January of each year, CynergyData Texas will file an annual return with the IRS reporting all payments in settlement of Visa/MasterCard/Discover cards and third party network transactions.
  • At the same time, CynergyData Texas will complete and mail a 1099-K form to all merchants in our portfolio who have accepted electronic payments. This form will report all monthly and annual gross sales income based on the applicable calendar year.


  • If a merchant’s legal name or Tax ID number in VIMAS does not match IRS records, CynergyData Texas at the instruction of the IRS, perform backup withholding from merchant funding by deducting and withholding income tax (up to 31%). Merchants subject to Federal income tax backup withholding may also be subject to State tax withholding.
  • These funds will be held by our Sponsor Bank and released only when notified by the IRS to do so. CynergyData Texas has no access to, or control over, these withheld funds.

If you have questions about the 1099K program, or if you need to correct missing or unmatched Tax ID information, call CynergyData Texas Customer Care at 512-250-2380.