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According to IRS, "If your 1099 shows an amount withheld under the backup withholding rules, report the amount as Federal income tax withheld on your income tax return for the year you received the income."
By entering the Federal Income tax withheld on your income tax return, you will be able to account for the 28% of your merchant deposits that American Express sent to the IRS.
https://www.irs.gov/taxtopics/tc307
According to American Express: "Q: What steps do I need to take to help avoid automatic backup withholding? A: To avoid the potential of having backup withholding imposed on your Merchant Account, you should ensure the legal name and TIN on file with American Express matches the IRS records. You can verify your Merchant Account information at any time by logging into your Merchant Account at americanexpress.com/merchant."
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