By: Christie Welch, Farmers' Market Specialist (firstname.lastname@example.org)
I wanted to provide an update on the new IRS rules for farmers' markets that accept SNAP benefits. Read below for more information as well as view the attachment. For those of you who work with ACS to accept SNAP, you can contact them directly. Their information is included in the attachment. For those of you who work with a Third Party Processor (TPP) you should receive information from them. In addition, the Farmers' Market Coalition conducted a webinar on this topic. You can view a recording of the webinar on their YouTube Channel: http://www.youtube.com/user/fmcorg.
Here is the information I received from Ohio Dept. of Job and Family Service:
Here are some key points regarding the new 1099K IRS reporting requirement. This was drafted from information in the FNS letter and initial ACS letter that were mailed last fall; plus we added a few FAQs for clarification. Please note the ACS phone number listed at the end of this overview is a special ACS number specifically for responding to retailer 1099K questions regarding the ACS information.
For all retailers with a Food and Nutrition Service (FNS) certification number, the company you contract with for your EBT point of sale device is now required by law to report to the IRS how much you have received in Food Assistance Program redemption payments.
In Ohio, Affiliated Computer Services (ACS) is the company that provides Point Of Sale devices (POS) to merchants who are EBT Only retailers. If you process thru a Third Party Processor (TPP) or use your point of sale device to also process debit and credit cards, then the company you have a contract with should have contacted you regarding this new IRS reporting requirement.
The reporting of redemption payments to the IRS for merchandise paid for by Food Assistance Program funds will begin January 1, 2012 and includes all Food Assistance Program redemption payments received by the merchant during the calendar year.
For ACS to report to the IRS the amounts for your Food Assistance Program redemption payments, you must provide ACS with your Tax Identification Number (TIN); this is done by sending ACS a completed W-9 Form. If you do not provide your TIN, the law requires ACS to withhold money from your settlement deposit for your Food Assistance redemption payments. Any funds withheld are forwarded to the IRS.
It is important that ACS receives your completed W-9 form promptly to allow time for processing. Failure to have your TIN on file with ACS on or before November 30, 2011 will result in a 28% IRS withholding on your Food Assistance redemption payment deposits beginning 1/1/2012. You may also be subject to an IRS penalty.
What is the latest time I can submit my TIN to avoid the withholding? ACS WILL NEED TO HAVE YOUR COMPLETED W-9 FORM NO LATER THAN NOVEMBER 30, 2011. THIS WILL ALLOW TIME FOR YOUR TIN TO BE VALIDATED BY THE IRS AND THEN ENTERED INTO ACS SYSTEMS.
When will the 28% withholding take effect and what will this withholding be applied to? WITHHOLDING TAKES EFFECT JANUARY 1, 2012 AND WILL BE APPLIED TO DEPOSITS OF FOOD ASSISTANCE PROGRAM REDEMPTION PAYMENTS IF ACS DOES NOT HAVE YOUR VALIDATED TIN ON FILE. For example, if a farmers market deposit of Food Assistance Program redemption payments is $100 and there is no valid TIN for the farmers market on file with ACS, then $28 would be withheld from the settlement deposit. These withholdings will continue until a valid TIN is on file with ACS. Note that when a correctly completed W-9 form is received, it could take a few weeks for a TIN to be validated by the IRS and entered into the ACS systems.
How do I recover any funds withheld? FUNDS THAT ARE WITHHELD WILL BE APPLIED TO YOUR TAXES OWED TO THE IRS FOR 2012. WHEN YOU FILE YOUR TAXES IN 2013 FOR CALENDAR YEAR 2012, ANY OVERPAYMENTS WILL BE RETURNED AS A TAX REFUND BY THE IRS. Note: the IRS requires that any funds withheld from a Food Assistance Program settlement deposit be submitted to the IRS daily, thus ACS cannot return any previously withheld funds to the merchant.
When will I receive my 1099 for filing my taxes? 1099K FORMS FOR PAYMENTS MADE IN CALENDAR YEAR 2011 WILL BE MAILED BY 1/31/2012 AND 1099Ks FOR PAYMENTS MADE IN 2012 WILL BE MAILED BY 1/31/2013. 1099K FORMS WILL BE SENT TO THE MERCHANT’S ADDRESS THAT ACS HAS ON FILE. Note: ACS receives merchant address information from FNS based on the address you provide to FNS. Also note: no withholding has taken place for any payments made in 2011 but a 1099K will be issued for these payments; any withholding for payments made in 2012 will be applied to your 2012 taxes when you file your taxes in 2013.
If you have any questions about this IRS reporting requirement and potential withholding, please refer to the IRS website at http://www.irs.gov/localcontacts/index.html or contact your tax professional.
If you have questions regarding your retailer information on file at ACS, please call ACS at 1-866-528-1127 between the hours of 8:00am and 8:00pm Eastern time.
Let me know if you have any questions or need anything else on this topic.
Thomas W. Powers
State Enterprise Solutions
Affiliated Computer Services, Inc.
A Xerox Company
294 East Campus View Blvd.
Columbus, OH 43235
Please don't hesitate to contact me if you have questions.
Christie Welch, Farmers' Market Specialist
The Business Development Network
at The OSU South Centers
1864 Shyville Rd.
Piketon, OH 45661
740-289-3727 Ext. 234
800-860-7232 (Ohio only) Ext. 234