Submit current W-9s to avoid backup withholding

“The only constant in life is change.”

This quote has been attributed to Greek philosopher Heraclitus, and between the sales and purchases of restaurants, transfers of ownership to Next Gens and spinoffs creating new organizations, most McDonald’s owner/operators would probably agree.

Amidst all this change, it is important to make sure nothing falls through the cracks. One thing that often gets overlooked is submitting updated W-9s to credit card processing companies when any changes are made to an organization.  This occurs if an entity changes hands and the Taxpayer Identification Number or business address has not been updated with the processing company.

If the information on the W-9 is not current, the processing company is required to withhold 24 percent of all future cashless deposits until updated and accurate information is provided to the cashless merchants.  McDonald’s owner/operators need to make sure they have submitted accurate W-9s to Discover, Amex and CTS Holdings, LLC, which is the reporting center for owner/operators’ Visa, Mastercard, American Express, debit and Arch gift cards.

Backup withholding is not money lost. It is money paid into the IRS that can be credited on your individual tax return – but only if it is reported through Form 1099-K.  Cashless merchants send out forms 1099-K at the end of January each year for each restaurant you own.

If your organization was subject to backup withholding at any point during the tax year, you will see an amount in Box 4 of the Form 1099-K, federal income tax withheld.  We recommend reconciling your cashless deposits to catch backup withholding sooner rather than later.  If you find your organization has backup withholding on your cashless deposits, our accounting staff is here to help you as needed.

Kristin Ward is a Tax Senior with Antares Group, Inc. She can be reached at kward@antarescpas.com.