The Internal Revenue Service has provided special transitional relief to banks and other payment settlement entities required under a 2008 law to begin withholding 28 percent of payments if they are unable to verify a taxpayer identification number for a retailer.
Payment processors are supposed to begin reporting payment card and third-party network transactions to the IRS on a new information form known as the Form 1099-K and withhold 28 percent of the money from retailers and others for whom a taxpayer identification number could not be verified, starting next year. However, under transitional relief granted by the IRS last week, they will not need to begin the withholding until 2013.
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