Title 26, Internal Revenue CodeRelease 119-110
§6050W Returns Relating to Payments Made in Settlement of Payment Card and Third Party Network Transactions
Title 26 › Subtitle F — Procedure and Administration › CHAPTER 61 — INFORMATION AND RETURNS › Subchapter A — Returns and Records › PART III — INFORMATION RETURNS › Subpart B — Information Concerning Transactions With Other Persons › § 6050W
Summary
Payment processors must file a yearly report listing each merchant they paid for card or third-party network sales. The report must name the merchant, give their address and tax ID number, and show the total amount of those sales. If a third-party network reports tips, it must also show amounts labeled as cash tips and the job of the person getting those tips. The IRS will set the form and timing for the reports. "Payment processor" means the bank or company that settles card payments and the central organization that pays sellers on a third-party payment network. If an intermediary handles payments for several sellers, that intermediary counts as the seller for reporting and as the payer when it makes payments. If an electronic payment facilitator actually pays sellers, that facilitator must file the report instead. A reportable transaction is any sale paid by a payment card or settled through a third-party payment network. Sellers with only foreign addresses are generally not included. A third-party settlement organization does not have to report for a seller unless that seller received more than $20,000 and had over 200 transactions in the year. Each payer must give each seller a written statement by January 31 showing the payer's contact info and the gross amounts reported (including tips and occupation if shown). The IRS can make rules to carry out these requirements and to prevent the same sale from being reported more than once.
Full Legal Text
Title 26, §6050W
Internal Revenue Code, Source: USLM XML via OLRC
(a)In general
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
(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.
Such return shall be made at such time and in such form and manner as the Secretary may require by regulations.
(b)Payment settlement entity
For purposes of this section
(1) In general
(2)Merchant acquiring entity
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)Third party settlement organization
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)Special rules related to intermediaries
For purposes of this section
(A) Aggregated payees
(B)Electronic payment facilitators
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)Reportable payment transaction
For purposes of this section
(1) In general
(2)Payment card transaction
The term “payment card transaction” means any transaction in which a payment card is accepted as payment.
(3)Third party network transaction
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)Other definitions
For purposes of this section
(1) Participating payee
(2)Payment card
The term “payment card” means any card which is issued pursuant to an agreement or arrangement which provides for— (A)
(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.
The acceptance as payment of any account number or other indicia associated with a payment card shall be treated for purposes of this section in the same manner as accepting such payment card as payment.
(3)Third party payment network
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.
Such term shall not include any agreement or arrangement which provides for the issuance of payment cards.
(e)Exception for de minimis payments by third party settlement organizations
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)Statements to be furnished to persons with respect to whom information is required
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.
The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was required to be made. Such statement may be furnished electronically, and if so, the email address of the person required to make such return may be shown in lieu of the phone number.
(g)Regulations
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
Sep 23, 2026
Release point: 119-110