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Yes, foreign payment settlement entities are subject to the reporting requirements under section 6050W.
The term "payment settlement entity" includes both domestic and foreign entities. Specifically, a payment settlement entity is defined as a domestic or foreign entity that is either a merchant acquiring entity in the case of payment card transactions or a third party settlement organization in the case of third party network transactions. This is outlined in Subsection 1.6050W-1(a)(4) of the Treasury Regulations.
Additionally, the IRS FAQ confirms that a payment settlement entity may be a domestic or foreign entity, thereby subjecting foreign payment settlement entities to the same reporting obligations as domestic entities.
However, there are specific rules regarding payments to foreign payees. For instance, a payment settlement entity that is a U.S. payor or U.S. middleman is not required to make a return of information for payments to a participating payee with a foreign address, provided certain documentation requirements are met to treat the payment as made to a foreign person. This is detailed in Subsection 1.6050W-1(a)(5)(ii) of the Treasury Regulations.
In summary, foreign payment settlement entities must comply with the reporting requirements under section 6050W, but there are specific provisions and exceptions related to payments made to foreign payees.
Sources:
§ 6050W. Returns relating to payments made in settlement of payment card and third party network transactions
Publication 1220 (9/2023)
§ 1.6050W-1. Information reporting for payments made in settlement of payment card and third party network transactions.
PLR 201240005
PLR 201219013
FS-2024-3
