Contact: Trust Account Hotline
Do you accept debit or credit cards from clients? A new IRS rule could cause problems if you're not ready.
The IRS is about to start complicating life for some attorneys.
Starting January 1st, attorneys who accept credit cards need to make sure that the names on their merchant accounts match the ones the IRS has on file. Some attorneys may have used abbreviations or acronyms when they opened their accounts.
If there is not an EXACT match between the information provided to the credit card processing company and the information on file with the IRS, there may be serious consequences:
• Beginning January 2013, the IRS will impose a 28% withholding penalty on all credit card transactions. That could include IOLTA client trust account if the account isn't labeled properly.
• Lawyers could also face ethical violations if they are unable to gain access to client funds in IOLTA accounts by failing to take the proper precautions.
Most credit card companies are notifying merchant accounts about the change. Ultimately, however, it's your responsibility to make sure that the IRS has your correct information. Please take the following steps:
• If you accept credit cards, contact your credit card processor to check the name on the account.
• Make whatever changes are necessary to stay in compliance.
For more information on Section 6050W visit www.IRS.gov or call the State Bar Trust Account Hotline at 602.340.7305.
About the State Bar
The State Bar of Arizona is a non-profit organization that operates under the supervision of the Arizona Supreme Court. The Bar includes approximately 17,000 active attorneys and provides education and development programs for the legal profession and the public. Since 1933 the Bar and its members have been committed to serving the public by making sure the voices of all people in Arizona are heard in our justice system.
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