The Housing and Economic Recovery Act of 2008 is a federal regulation that requires "merchant acquiring entities" to report the gross transaction amount of their merchant customers to the IRS. The new requirements from Internal Revenue Service (IRS) will apply to any payment transaction beginning on January 1, 2011, with required reporting and tax withholding to begin in 2012.

The new law requires banks and other payment settlement entities to collect and verify the tax identification number (TIN) along with the merchant’s legal name and address associated with the TIN number.If there is any discrepancies between the merchant’s TIN or associated information in the reporting entity’s records and the IRS’ records, the IRS requires the reporting entity to withhold a minimum of 28 percent of the merchant‘s future payments from card transactions. This withholding provision goes into effect for payments starting in 2012. All merchant acquiring entities must collect via the W-9 Form and verify the Tax Identification Number by performing TIN Matching and associate the legal business name and address for each of their merchants on file.

Beginning in January 2012, every payment processor will file a 1099-K form with the IRS reporting the gross amount of each merchant’s card transactions for the 2011 year, as well as provide a corresponding statement to merchants.