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Sales paid for by stored-value cards or gift cards are reportable payment card transactions if the card is accepted by a network of persons unrelated to the issuer and each other. However, if the card is only accepted as payment by the issuer or someone who is related to the issuer of the card (e.g., a subsidiary company or the company itself), then the stored-value cards do not fit the definition of a payment card, and sales made with such cards are therefore not reportable.
This distinction is based on the definition of a payment card under Treasury Regulation § 1.6050W-1(b)(3), which requires that the card be accepted by a network of unrelated persons who agree to accept the card as payment. If the card is only accepted by related entities, it does not meet this definition and thus is not subject to the reporting requirements under section 6050W.
Sources:
Notice 2011-78
§ 1.6050W-1. Information reporting for payments made in settlement of payment card and third party network transactions.
Publication 1220 (9/2023)
T.D. 9496
FS-2023-6
FS-2024-3
