I'm wondering what implications - tax or otherwise - there are for a co-signer with a SSN for an international merchant setting up a merchant account in the US (who doesn't have a SSN). I have a bank account and evrything, just not the SSN. I don't want to cause a problem for a friend, especially taxwise.

Someone wrote:

>>keep in mind the merchant account is yours - it can be one person's name. What you seem to be running into the the co-signer issuer (not having a SSN). This is where your problem will lie - with any processor. Honestly, it freaks them out. If something were to happen to your business and a lot of chargebacks happened, they want someone to be reliable. With you having a SSN it is a lot easier to be tracked with that little SSN.

Thanks.

I'm wondering what implications - tax or otherwise - there are for a co-signer with a SSN for an international merchant setting up a merchant account in the US (who doesn't have a SSN). I have a bank account and evrything, just not the SSN. I don't want to cause a problem for a friend, especially taxwise.



Basically it sounds like you are signing on as a personal guarantor to the account; what that means is that if anything were to happen in terms of chargebacks, fines, etc, you would be held liable. As a guarantor, they can come after you first without going after the other guy or the business, so make sure that you know exactly what you friend is doing with their merchant account.

Apex is correct. Its very similar to guarranteeing an unsecured loan, so you want to make sure you know the potential liabilities of the person/business. Your acquirer may also require the signer to be on the articles of incorporation (if incorporated), so you probably want to check on that as well.

That's fine I'm just wondering if there is some tax implication - as in it is reported as income for him. Anyone know?

These merchant accounts are supposed to be only available to US residents ... so by using an SSN you are purporting to be basically US resident.

I am sure that the IRS could (whether they would not is another matter) construe that the merchant account is eligible for US taxes ...

If they do, at that point in time, the SSN signee is up to their eyeballs with tax lawyers and accountants.

You'd really want to consult with an accountant to be sure, but my understanding is that the key issue is where the settlements go and whether or not that results in income for the co-signer. The income is what's taxable. But, you the are best off speaking with a professional before you make any decisions. As far as other implications, one is that the co-signer will get an inquiry on their credit report.

if you get professional advice, please let us know what you found out !!!

I have asked CDGcommerce what they do with the co-signer info but they haven't replied for 2 days and the ticket number they gave out results in an sql error when entered on their website!

I don't imagine there can be tax implications if the money from a sole-proprietorship is not going to the co-signer.

Hmmm ...

The sole prop is using somebody elses SSN, now is this supposed to be a guarantor or somebody attached to the business? ... if its somebody attached to the business then it should have been a partnership.

All I have read on US merchant account is that you are supposed to be, effectively, a US resdient business. Assuming that the SSN is attached to the business, the IRS could construe business income applicable to the SSN.

Anyways, that is my conservative concerned logic ... if CDGCommerce gets back to you then PLEASE let me know ... I have an SSN, a US Bank account, the works ... but I don't reside in the US any longer. I would love to us a US merchant account / payment processor.