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Federal Backup Withholding Notice
Federal Backup Withholding Notice

If your legal name on file does not match your tax filing name, here's how you would update your Business Information.

Shaney Thrasher avatar
Written by Shaney Thrasher
Updated over 5 months ago

If you’ve been directed to this page it’s because we’ve received notification from the IRS that your legal name on file does not match your tax filing name and may result in a future backup withholding from the federal government. As a courtesy to our customers, we are providing this notice and assistance with this process. Please take the steps below to solve the issue but if you run into any issues or need help don’t hesitate to contact us at [email protected]

Action Required: Update Your Business Information

Option 1: Expedited Update Via Businesstrack

Please note for the quickest solution to update your information we recommend using Businesstrack.

To submit a correction to your tax filing information online, navigate to https://www.businesstrack.com. To log in, you will need to enter the 10-digit Communication ID. This Communication ID is located in your mailed BUW notice and/or was provided to you if applicable in your courtesy reminder from DaySmart. Once you have logged in, you will be prompted to fill out and submit IRS Form W-9 electronically. You will be able to specify an e-mail address to receive a confirmation notice when the information is validated. Below is a detailed outline of the steps.

  1. Go to Business Track | First Data on your web browser

  2. Select “Tax Information Update".

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  3. On the landing page click Next - Please note, there is important information here that outlines how you can receive confirmation the update has been completed.

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  4. In the box provided enter the 10 digit commnuication ID you have received. Verify the reCAPTCHA then click submit

  5. Review the information on this screen and confirm it is correct. If the information provided is incorrect you may have entered the wrong communication ID. Please call into support for further assistance (877) 828-0720.

  6. Review the information provided on this screen. This will show the last 4 of your current TAX ID, the Current FILING name and whether it is valid. Click Next

  7. Enter the correct IRS Filing Name, TAX ID and whether this is filed under a Social Security Number or Employer Identification Number Click Next

  8. Enter your name to certify you agree to the update and the information provided is correct.

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  9. Specify if you would like to be notified once the change has been made then click "Update"

Option 2: Via your Cardpointe Portal

If you are unable to utilize the Businesstrack option, Cardpointe also offers a solution for updating your information.

Please follow the steps below and use this quick video that walks you through the below process.

  1. Have the legal signer of your credit card agreement sign into the CardPointe portal.

  2. Navigate to the support tab, click “Create Ticket” and select the reason "Legal/Tax ID." Proceed to fill out the information requested in the Ticket, and you will need to upload either a W9, SS-4 IRS Issuance Letter, or your Most Recent Tax Return.

  3. Once complete hit "Save" and a rep from our Merchant Solutions team will get the information updated for you. If anything else is needed, they will comment on the ticket and you will be notified.

  4. Please email [email protected] once you’ve completed the ticket or you feel this issue is resolved.


General Questions

What is IRS Backup Withholding?

Similar to income tax withholding on a paycheck, backup withholding is imposed by the IRS on certain types of investments and income. The Housing and Recovery Act of 2008 included Amendment 6050W, Merchant Tax Reporting. This Amendment requires all merchant accounts providers to collect and verify TINs and report annual gross payments processed by debit or credit cards using Form 1099-K (Payment Card and Third Party Network Transactions) to the IRS and merchants.

Who is affected?

Merchants who have not provided a valid Taxpayer Identification Number (TIN), address, and name match to their merchant accounts provider.

Why is this important?

Merchants with mismatched TINs could risk an automatic withholding of a percentage of their merchant account deposits. Additionally, some states may impose their own separate withholding penalty. This could result in a merchant not having access to the withheld funds until the following year when they file a tax return. Merchants receive a 1099-K form each calendar year with the TIN information we have on file.

What is it?

Backup Withholding (BUW) is a program instituted by the Internal Revenue Service (IRS) where funds are withheld from a merchant as a result of failing to provide correct taxpayer information to their payment card processor.

Typically, the amount of funds withheld is between 24-28% of each batch that the merchant submits.

What causes it?

Backup Withholding (BUW) occurs when a merchant fails to provide the correct taxpayer information to their processor. In short, the combination of the Legal Business Name and Tax Identification Number (Tax ID) does not receive a match when ran against the records from the IRS.

A merchant can receive a mismatch from an incorrect Legal Name, Tax ID, or both.

Please note that the IRS Database is very case sensitive (ex. use of "&" instead of "and" can cause an mismatch and put a merchant onto BUW). As a result, it is important for merchants to know that it is crucial that they are providing their information as accurately as possible.

Who is withholding the funds?

It is important to remember that Fiserv, DaySmart, and CardConnect is not the institution withholding a merchant's funds.

Though we are the ones that fund the merchant for their processing, the IRS has legal authority to withhold the allotted percentage from each batch when a merchant is on BUW.


Retrieving Held Funds

  • Example: BUW stopped on 1/2/2022, funds are not released until merchant files their 2022 taxes in 2023

  • Withheld funds are sent to the IRS and not released until the merchant files their taxes for the year the withholding stopped

  • Withheld funds are applied to any the merchant owes on their taxes and any remaining funds are released as a refund

  • Look for the box that says Federal Income Tax Withheld, it will have an amount of what was withheld by the IRS. You can use this amount to show proof to the IRS that money is owed to you when filing your taxes. Please consult a tax professional about this as we can’t offer tax filing help.

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More info from an IRS W-9 form:

Backup Withholding

What is backup withholding? Persons making certain payments to you
must under certain conditions withhold and pay to the IRS 24% of such
payments. This is called “backup withholding.” Payments that may be
subject to backup withholding include interest, tax-exempt interest,
dividends, broker and barter exchange transactions, rents, royalties,
nonemployee pay, payments made in settlement of payment card and
third party network transactions, and certain payments from fishing boat
operators. Real estate transactions are not subject to backup
withholding.


You will not be subject to backup withholding on payments you
receive if you give the requester your correct TIN, make the proper
certifications, and report all your taxable interest and dividends on your
tax return.


Payments you receive will be subject to backup withholding if:

  1. You do not furnish your TIN to the requester,

  2. You do not certify your TIN when required (see the instructions for

Part II for details),

  1. The IRS tells the requester that you furnished an incorrect TIN,

  2. The IRS tells you that you are subject to backup withholding

because you did not report all your interest and dividends on your tax
return (for reportable interest and dividends only), or

  1. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only).
    Certain payees and payments are exempt from backup withholding.
    See Exempt payee code, later, and the separate Instructions for the Requester of Form W-9 for more information.

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