If you accept credit cards from clients, you should read this!

credit cardsSoon, a new IRS regulation will go into effect that impacts lawyers who accept debit and credit card payments from clients. If certain precautions are not taken before Jan. 1, 2013 you may adversely impact your client trust accounts.

Section 6050W was added to the Tax Code in January 2012, requiring credit card processing companies to verify and match your federal tax identification number and legal name on your merchant account to IRS records (“Form 1099-K”). An EXACT match is required. If you have either abbreviated your name or used an acronym for your merchant account, you will need to contact your credit card processor to assure that your legal name on your merchant account exactly matches the legal name you use to file your tax returns.

If there is NOT an exact match between the information provided to the credit card processing company and the information on file with the IRS, there are serious consequences:

  • Beginning Jan. 2013, the IRS will impose a 28% withholding penalty on all credit card transactions, including those that the lawyer directs to the IOLTA client trust account.
  • If client funds that should be in the IOLTA account are withheld due to the lawyer’s failure to act and thus are not available to the client on demand, ethical issues are raised.

If a mismatch occurred you should have already received notice from your credit card processing company of the problem. However, there is no certainty that all processing companies have provided notice. We encourage you to contact your credit card processor today to ensure you have an exact match.

You’ll find more information on Section 6050W on the IRS website.

9 thoughts on “If you accept credit cards from clients, you should read this!

  1. Pingback: NWSidebar: One Year Later | NWSidebar

  2. Pingback: NWSidebar Turns 1! | NWSidebar

  3. realizare site

    Hey! This is my first comment here so I just wanted to give a quick
    shout out and tell you I genuinely enjoy reading
    your posts. Can you recommend any other blogs/websites/forums that
    go over the same subjects? Thanks for your time!

  4. Bret

    If you could do something you never did
    before would you? I mean writing about If you accept credit cards from clients,
    you should read this! | NWSidebar is good but is it a safe subject
    considering your internet site is about medium oak tv stand?
    All things considered it is a great information however
    I bet you could try branching into other subjects like medium oak tv stand for example.
    Just an idea… I trust you don’t mind me saying that.

  5. Audry

    Every weekend i used to pay a quick visit this site, for the reason
    that i want enjoyment, as this this site conations genuinely fastidious funny material too.

  6. WSBA

    What browser/device are you using? We regularly test on outside connections and mobile devices and haven’t encountered any issues with the images.

  7. spray on insulation

    Hmm is anyone else experiencing problems with the pictures on this
    blog loading? I’m trying to determine if its a problem on my end or if it’s the blog.
    Any feed-back would be greatly appreciated.

  8. Pingback: FDIC Changes for IOLTAs | NWSidebar

Comments are closed