Important Information for Lawyers Who
Accept Credit Cards
It is for important for attorneys to be aware of the potential
withholding of 28% from credit card transactions that can occur
beginning January 1, 2013, if the lawyer’s tax ID number and name that are on file with the credit card company do NOT match that same information on file with the IRS.
- Changes in the law regarding the reporting of credit card transactions have the potential to negatively impact IOLTA accounts and lead to ethical violations by lawyers.
- Pursuant to the Housing Assistance Tax Act of 2008, credit card processing companies are required to verify and match each merchant’s federal tax identification number and her legal name with those found on file with the IRS. An EXACT match is required.
- For the purposes of this requirement, lawyers who accept credit card payments are considered “merchants.”
- 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 are serious consequences:
- Beginning January 2013, the IRS will impose a 28% withholding penalty on all credit card transactions, including those that the lawyer directs to their IOLTA account.
- If client funds that should be in the IOLTA account are withheld due to the lawyer’s failure to act and thus are not available to the client on demand, ethical issues are raised.
- The credit card processing company should have received information from the IRS if a mismatch occurred and already notified the lawyer of the problem. However, it is not known if all processing companies have provided such notice.
- Steps lawyers can take now to avoid an ethical violation in 2013:
- Contact the credit card processor to determine that a match occurred
- Correct mismatches, if informed of one
For more information on this issue, see
Jan. 30, 2014
TAJF Honors William O. Whitehurst for Efforts in IOLTA Program's Beginning
Jan. 17, 2014
TAJF Marks 30th Anniversary, Joins With LSC For Panel, Texas Pro Bono Service Awards
TAJF Turns 30 this year! See information about our Anniversary Kickoff Event, Jan. 23
about "Success Stories" 2013 and how you can help TAJF write new stories
Nov. 19, 2013
Texas Corporate Counsel Community Raises $48,000 for Civil Legal Services
Nov. 18, 2013
State Bar of Texas Announces Move to a Prime Partner Bank
Serving the Legal Needs of Those Who Served - Veterans Day 2013
November is Prime Partner Bank Recognition Month!
Oct. 29, 2013
TAJF Seeks Director of Finance
Oct. 22, 2013
Pro Bono Week Kickoff Event Honors New Supreme Court Justice and Access to Justice Supporters
Oct. 18, 2013
The application period for the Texas Equal Justice Works Fellowship program has
been extended to Dec. 1
Sept. 13, 2013
Announces 2013-14 Grant Awards
Sept. 10, 2013
Announces 2013 Texas Equal Justice Works Fellows
Sept. 4, 2013
Ferguson and Tottenham appointed to TAJF Board
July 19, 2013
Announces Grants for Veterans' Legal Services
May 28, 2013
Legislature Provides Funding for the State's Legal Aid System
May 16, 2013
Fort Bend County Banks Receive Prime Partners in Justice Award