Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

Offshore Payment Card Reporting

The IRS intends to amend Internal Revenue Code Section 6050W that requires annual information reporting for payment card transactions beginning January 1, 2011.  The amendment serves to respond to concerns about the administrative burden of the new reporting requirements.  Section 6050W requires U.S. payment settlement entities to report information to the IRS about those payees receiving over $20,000 in gross payments and over 200 payments per calendar year.  In the meantime, Notice 2011-71 has been issued and can be relied on until the final amendment is issued.  Under this Notice, the IRS provides guidelines for U.S. payment settlement entities making payments outside of the U.S. to offshore accounts.  These payors are only subject to the new reporting requirements if any of the following apply:

• There is a U.S. address associated with the payee
• The payment settlement entity has standing instructions to direct payment to a bank account maintained in the U.S.
• The payee submits for payment in U.S. dollars
• The payment settlement entity knows or has reason to know that the payee is a U.S. person

If any of the above applies, the payor may still not be subject to the reporting requirements if they obtain proof of non-U.S. status from the payee by a W-8 or other approved statement before payment is made.  Also, the payor may not be subject to the reporting requirements if the name of the payee indicates it is a foreign per se corporation.

Jill A. Helm, CPA