Title 26 — Internal Revenue CodeRelease 119-73
§6050W Returns relating to payments made in settlement of payment card and third party network transactions
Title 26 › Subtitle Subtitle F— - Procedure and Administration › Chapter CHAPTER 61— - INFORMATION AND RETURNS › Subchapter Subchapter A— - Returns and Records › Part PART III— - INFORMATION RETURNS › Subpart Subpart B— - Information Concerning Transactions With Other Persons › § 6050W
Summary
Payment settlement entities must file a yearly report that lists each participating payee’s name, address, and tax ID, the total gross amount paid to that payee for card or third‑party network transactions, and — for third‑party settlement organizations — the part of those payments reasonably marked as cash tips plus the tip‑earner’s occupation. They must also give each payee a written statement with a contact phone number and the same payment totals and tip breakdown. A few short definitions: a payment settlement entity is either the merchant‑acquiring entity for card sales or the third‑party settlement organization for third‑party network sales. A merchant‑acquiring entity is the bank or group that must pay merchants for card sales. A third‑party settlement organization is the central group that pays sellers in a third‑party payment network. Reportable payment transactions are payment card transactions or third‑party network transactions. A participating payee is a person who accepts those payments (people with only foreign addresses are generally excluded). Third‑party settlement organizations only must report for a payee if payments to that payee exceed $20,000 and there are more than 200 transactions. The Treasury can make rules to carry out and avoid duplicate reporting.
Full Legal Text
Title 26, §6050W
Internal Revenue Code — Source: USLM XML via OLRC
(a)Each payment settlement entity shall make a return for each calendar year setting forth—
(1)the name, address, and TIN of each participating payee to whom one or more payments in settlement of reportable payment transactions are made,
(2)the gross amount of the reportable payment transactions with respect to each such participating payee and 11 So in original. Probably should be preceded by a comma.
(3)in the case of a third party settlement organization, the portion of reportable payment transactions that have been reasonably designated by payors as cash tips and the occupation described in section 224(d)(1) of the person receiving such tips.
(b)For purposes of this section—
(1)The term “payment settlement entity” means—
(A)in the case of a payment card transaction, the merchant acquiring entity, and
(B)in the case of a third party network transaction, the third party settlement organization.
(2)The term “merchant acquiring entity” means the bank or other organization which has the contractual obligation to make payment to participating payees in settlement of payment card transactions.
(3)The term “third party settlement organization” means the central organization which has the contractual obligation to make payment to participating payees of third party network transactions.
(4)For purposes of this section—
(A)In any case where reportable payment transactions of more than one participating payee are settled through an intermediary—
(i)such intermediary shall be treated as the participating payee for purposes of determining the reporting obligations of the payment settlement entity with respect to such transactions, and
(ii)such intermediary shall be treated as the payment settlement entity with respect to the settlement of such transactions with the participating payees.
(B)In any case where an electronic payment facilitator or other third party makes payments in settlement of reportable payment transactions on behalf of the payment settlement entity, the return under subsection (a) shall be made by such electronic payment facilitator or other third party in lieu of the payment settlement entity.
(c)For purposes of this section—
(1)The term “reportable payment transaction” means any payment card transaction and any third party network transaction.
(2)The term “payment card transaction” means any transaction in which a payment card is accepted as payment.
(3)The term “third party network transaction” means any transaction described in subsection (d)(3)(A)(iii) which is settled through a third party payment network.
(d)For purposes of this section—
(1)(A)The term “participating payee” means—
(i)in the case of a payment card transaction, any person who accepts a payment card as payment, and
(ii)in the case of a third party network transaction, any person who accepts payment from a third party settlement organization in settlement of such transaction.
(B)Except as provided by the Secretary in regulations or other guidance, such term shall not include any person with a foreign address. Notwithstanding the preceding sentence, a person with only a foreign address shall not be treated as a participating payee with respect to any payment settlement entity solely because such person receives payments from such payment settlement entity in dollars.
(C)The term “person” includes any governmental unit (and any agency or instrumentality thereof).
(2)The term “payment card” means any card which is issued pursuant to an agreement or arrangement which provides for—
(A)one or more issuers of such cards,
(B)a network of persons unrelated to each other, and to the issuer, who agree to accept such cards as payment, and
(C)standards and mechanisms for settling the transactions between the merchant acquiring entities and the persons who agree to accept such cards as payment.
(3)The term “third party payment network” means any agreement or arrangement—
(A)which involves the establishment of accounts with a central organization by a substantial number of persons who—
(i)are unrelated to such organization,
(ii)provide goods or services, and
(iii)have agreed to settle transactions for the provision of such goods or services pursuant to such agreement or arrangement,
(B)which provides for standards and mechanisms for settling such transactions, and
(C)which guarantees persons providing goods or services pursuant to such agreement or arrangement that such persons will be paid for providing such goods or services.
(e)A third party settlement organization shall be required to report any information under subsection (a) with respect to third party network transactions of any participating payee only if—
(1)the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions exceeds $20,000, and
(2)the aggregate number of such transactions exceeds 200.
(f)Every person required to make a return under subsection (a) shall furnish to each person with respect to whom such a return is required a written statement showing—
(1)the name, address, and phone number of the information contact of the person required to make such return, and
(2)the gross amount of the reportable payment transactions (including a separate accounting of any such amounts that have been reasonably designated by payors as cash tips and the occupation described in section 224(d)(1) of the person receiving such tips) with respect to the person required to be shown on the return.
(g)The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out this section, including rules to prevent the reporting of the same transaction more than once.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2025—Subsec. (a)(3). Pub. L. 119–21, § 70201(f)(3)(A), added par. (3). Subsec. (e). Pub. L. 119–21, § 70432(a)(1), amended subsec. (e) generally. Prior to amendment, text read as follows: “A third party settlement organization shall not be required to report any information under subsection (a) with respect to third party network transactions of any participating payee if the amount which would otherwise be reported under subsection (a)(2) with respect to such transactions does not exceed $600.” Subsec. (f)(2). Pub. L. 119–21, § 70201(f)(3)(B), inserted “(including a separate accounting of any such amounts that have been reasonably designated by payors as cash tips and the occupation described in section 224(d)(1) of the person receiving such tips)” after “reportable payment transactions”. 2021—Subsec. (c)(3). Pub. L. 117–2, § 9674(b), inserted “described in subsection (d)(3)(A)(iii)” after “any transaction”. Subsec. (e). Pub. L. 117–2, § 9674(a), amended subsec. (e) generally. Prior to amendment, subsec. (e) related to an exception for de minimis payments by third party settlement organizations. 2018—Subsec. (d)(1)(B). Pub. L. 115–123 inserted at end “Notwithstanding the preceding sentence, a person with only a foreign address shall not be treated as a participating payee with respect to any payment settlement entity solely because such person receives payments from such payment settlement entity in dollars.”
Statutory Notes and Related Subsidiaries
Effective Date
of 2025 AmendmentAmendment by section 70201(f)(3) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2024, see section 70201(j) of Pub. L. 119–21, set out as a note under section 45B of this title. Pub. L. 119–21, title VII, § 70432(a)(2), July 4, 2025, 139 Stat. 243, provided that: “The amendment made by this subsection [amending this section] shall take effect as if included in section 9674 of the American Rescue Plan Act [of 2021, Pub. L. 117–2].”
Effective Date
of 2021 Amendment Pub. L. 117–2, title IX, § 9674(c), Mar. 11, 2021, 135 Stat. 185, provided that: “(1) In general.—The amendment made by subsection (a) [amending this section] shall apply to returns for calendar years beginning after December 31, 2021. “(2) Clarification.—The amendment made by subsection (b) [amending this section] shall apply to transactions after the date of the enactment of this Act [Mar. 11, 2021].”
Effective Date
of 2018 Amendment Pub. L. 115–123, div. D, title II, § 41117(b), Feb. 9, 2018, 132 Stat. 162, provided that: “The amendment made by this section [amending this section] shall apply to returns for calendar years beginning after December 31, 2017.”
Effective Date
Section applicable to returns for calendar years beginning after Dec. 31, 2010, with exception for purposes of carrying out any TIN matching program, see section 3091(e) of Pub. L. 110–289, set out as an
Effective Date
of 2008 Amendment note under section 3406 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 6050W
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73