September 8, 2011
A new mandatory Internal Revenue Service law, effective January 2012, requires that all credit card payment activity be reported to the IRS. Failure to comply with these new rules could result in a 28% reduction of your revenue that is paid by credit card.
This mandatory reporting is the responsibility of your credit card processor (the company you contract with to handle your processing), however, they need information from you to complete the process. It is important to verify that your processor has the exact name and Employer Identification Number (EIN) for your practice. If your name and EIN are listed incorrectly, hefty consequences can result.
You may think that your processor has your correct information, but please note the following examples:
- If your practice name, according to your tax ID paperwork (the IRS letter that states your EIN) is John Smith, D.D.S., but the name you listed with your credit card processor is ABC Smiles, the information would be considered a mismatch to the IRS.
- If your practice uses your social security number for tax purposes, rather than an EIN, you need to be sure to list only your legal name with your credit card processor. If your credit card processor knows you as John Smith, D.D.S., you might appear as a mismatch to the IRS because when your social security number was issued, you most likely did not carry the D.D.S. initials following your name.
It is extremely important that you verify that your name and EIN are identical on your IRS documentation and your credit card processing information. If these items do not match, your processor is required to withhold 28% of your credit card processing revenues beginning Jan. 1, 2012. Additional fees and fines may also apply. These withheld funds are required to be turned over to the IRS by the credit card processor. In order to avoid this, contact your credit card processor and verify your correct name and EIN. We suggest contacting you credit card processor to find out the specific documentation they require to validate your EIN.
For additional information, contact Pam Brockhaus at the CDA at 303-996-2843, 800-343-3010 x103 or email@example.com.