SECTION 7. TIN SOLICITATION

ACTIVITIES

.01 TIN solicitation methods . A QPCA should solicit merchant/payee TINs in a manner described in section 301.6724–1(e)(1)(i) of the Regulations on Procedure and Administration. Alternatively, a QPCA may obtain merchant/payee TINs from a reputable third-party source.

.02 Notification and disclosure re- quirements . A QPCA must give each merchant/payee for which it acts as agent the written notice described in section 6.03(1)(c) and must give each cardholder/payor for which it acts as agent the written notice described in 6.03(1)(b). In addition, a QPCA must give written notice of its status as a QPCA, and of any change in that status, to any member, affiliate, or licensee that issues payment

notice is furnished must contain, in bold and conspicuous type, the legend: “Important Tax and Privacy Materials Enclosed.”

(c) The text of the written notice provided to merchant/payees must be in bold and conspicuous type, and the notice must include the legend: “Important Tax and Privacy Materials.” The notice must state:

As a merchant, you may engage in transactions with cardholders for which cardholders may be required to file an information return with the Internal Revenue Service. If a cardholder is required to file an information return reporting a transaction with you to the Internal Revenue Service, the cardholder must include the amount of the payment, your name, and your taxpayer identification number. To facilitate the exchange of information between you and cardholders, [insert name of payment card organization] has received

[is seeking] approval from the Internal Revenue Service to provide a merchant data service to merchants that engage in transactions with cardholders. If you accept the merchant data service,

[insert name of payment card organization] will act on your behalf, and on behalf of cardholders, to solicit, furnish, and validate your taxpayer identification number.

If you accept the merchant data service, your name and your taxpayer identification number will be submitted to the Internal Revenue Service for validation against the Internal Revenue Service taxpayer identification number database. Please be advised that if you accept the merchant data service,

[insert name of payment card organization] may request that you provide your taxpayer identification number to it or may seek to obtain your taxpayer identification number from a reputable third-party source. If you accept the merchant data service, your taxpayer identification number and corporate status may be provided to cardholders.

Please be aware that [insert name of payment card organization] has advised cardholders who may receive your taxpayer identification number that they must maintain the confidentiality of your information and may use it only for purposes of backup withholding and filing information returns with the Internal Revenue Service.

You may decline the merchant data service. If you do not want [insert name of payment card organization] to validate your name and taxpayer identification number; and to provide your taxpayer identification number and corporate status to cardholders you must complete the enclosed (or attached) form and return it [insert, as applicable, mailing, facsimile (fax) transmission, and/or e-mail directions].

You will be deemed to have agreed to accept the merchant data service with respect to any payments you receive before the date on which [insert name of payment card organization] receives your reply.

[Insert, if applicable: If you decline the merchant data service before January 1, 2008, you should also discontinue accepting the card as a means of obtaining payment until that date. If you continue to accept the [insert name of payment card] as a means for obtaining payment you will be deemed, notwithstanding the return of the enclosed (or attached) form, to have agreed to accept the merchant data service with respect to payments you receive before January 1, 2008.]

If you decline the merchant data service, you may accept the card as a means for obtaining payment [if notice is provided before January 1, 2008, insert: beginning on January 1, 2008]. If you accept the card as a means of obtaining payment after declining the merchant data service, [insert name of payment card organization] is required to report to the cardholder making the payment that you have declined the merchant data service.

Your information (including, if applicable, the information that you have declined the merchant data service) will be provided to cardholders by U.S. mail unless you complete and return the enclosed (or attached) consent form indicating that you want your information to be provided electronically by [insert manner ( e.g., e-mail or posting on a secure website) by which information will be provided electronically]. Your consent to your data being provided electronically will remain in effect until [insert duration of consent]. You may withdraw your consent by contacting

[insert name of payment card organiza

July 23, 2007 139 2007–30 I.R.B.

in the information in the original application. Before renewal of the determination, the IRS may review the QPCA’s systems. In addition, the QPCA must demonstrate that the merchant/payee data continues to be reliable. The application for renewal must include the results from participation in the IRS TIN Matching Program during the current five-year term. The IRS will make every effort to issue a decision on a renewal application at least 30 days before the expiration of the current five-year term. In the event that the IRS does not issue a decision on a timely renewal application before the expiration of the existing QPCA determination, the existing determination will remain in effect until the IRS issues a decision on the renewal application.

.02 Revocation of determination . The IRS may revoke a QPCA determination before the expiration of its five-year term if the IRS determines, based on the results of the QPCA’s participation in the IRS TIN Matching Program, that the merchant/payee data is not reliable or if the payment card organization fails to meet any of the requirements in section 6, 7, or 8. A QPCA may terminate its status as a QPCA upon 60 days written notice to the IRS.