So far, American Express appears to be the only credit card company enforcing the law and, according

NASSAU, Bahamas –  The Bahamas Hotel and Tourism Association (BHTA) has flagged a potentially crippling development within the United States tax legislation that could have far reaching implications for hoteliers and tourism attractions across the Caribbean.
According to the Nassau Guardian, the BHTA has brought to the urgent attention sands hotel reno of the Caribbean Hotel and Tourism Association the fact that US credit card companies have been mandated to implement an automatic 28% withholding fee unless the merchant receiving the payment is compliant with new Internal Revenue Service (IRS) regulations.
In a far-reaching action reminiscent of the new Foreign sands hotel reno Account Tax Compliance sands hotel reno Act (FATCA) regulations with which many financial institutions across the region must now comply, the new rules added to the US Tax Code in January 2012 means that credit card processing companies must collect and verify the tax identification sands hotel reno number (TIN) and legal name associated with that number for each merchant customer.
According to a BHTA notice to its members acquired by the Guardian: If there is a discrepancy between the merchant sands hotel reno s TIN and associated legal name in the credit card processing sands hotel reno company records and IRS records, or if the merchant does not provide TIN, the IRS now requires sands hotel reno the processing company to withhold 28 percent of the merchant s future payment credit card transactions until the issue is resolved, the notice read. The back up withholding provision of the law went into effect for transactions on and after January sands hotel reno 1, 2013.
So far, American Express appears to be the only credit card company enforcing the law and, according to the BHTA, several hotels have already been caught by the new regulations and have had the withholding fees levied on them.
However, should all the credit card companies start implementing the withholding fees, restaurants, hotels, and other tourism attractions across the Caribbean who count on American visitors for much of their business could face serious cash flow restraints, plus the added problem of becoming IRS compliant.