Sending invoices electronically is a quick and convenient way to bill customers for goods and services they’ve purchased from your company. In many cases, the email invoice will include a click-to-pay button to encourage your customers to pay by credit or debit card right when they receive the invoice.
For every transaction you process that is subject to sales tax, you pay processing fees on the total amount, including the sales tax. Processing fees paid on sales tax can add up quickly, so improperly deducting credit card processing fees paid on sales tax can be a costly mistake, a fact that many businesses that do their own taxes fail to consider.
In 2018, the Supreme Court ruled in South Dakota v. Wayfair that states can require businesses to collect sales tax in states where they don’t have a business presence.
Processors must report all settled payment card transactions under section 6050w. And they must perform backup withholding at a rate of 28% for merchants that have incorrect TIN or tax filing names.
