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Congress is on the verge of requiring payment card processors to tell the Internal Revenue Service how much money merchants receive through credit card and debit card transactions.
The Bush administration thinks this kind of third-party reporting of revenue would encourage more businesses to report their income accurately. This could help close the tax gap -- the difference between what the government is owed in taxes and what it actually collects.
Congress views the requirement as an easy way of raising revenue to pay for other tax cuts or additional government spending. It estimates the plan could raise nearly $10 billion in 10 years.
I think this a version of a same mesure measure Sen. Chris Dodd tried to quietly slip into the mortgage refinance bill which slashdot and other outlets reported on.
The Senate mortgage bill proposed by Sen. Chris Dodd (who was the recipient of a sweetheart deal on his mortgage from Countrywide, one of the beneficiaries of the bill) includes an attempt to sneak into law a requirement that all electronic payment processors send detailed transaction data to the federal government. The proposed law contains an exception for businesses with fewer than 200 transactions or a total value less than $10,000.
Quoting FreedomWorks chairman Dick Armey (former House majority leader) from the article: 'This is a provision with astonishing reach, and it was slipped into the bill just this week. Not only does it affect nearly every credit card transaction in America, such as Visa, MasterCard, Discover, and American Express, but the bill specifically targets payment systems like eBay's PayPal, Amazon, and Google Checkout that are used by many small online businesses. The privacy implications for America's small businesses are breathtaking.'"
This is the same bill that contains a controversial provision to fingerprint all mortgage brokers.
Slashdot Article [yro.slashdot.org]
Although Bush is threatening to veto this bill, lawmakers on both sides are gearing up to over-ride him. And, I've read in other articles, that banks like Bank of America, and some others, actually authored this bailout bill for Dodd and others.
Supporters of the measure claim it will generate $10 billion in new tax revenue over 10 years. However, considering that the US of A borrows $3 billion a day, this is like trying to catch one fish by draining the lake.
There are 2 main implications for webmasters here:
1. It will get more expensive and time consuming to adhere to this.
2. If you use electronic payment to buy anything (or sell anything) - then you have no privacy. The IRS will know the nature of your transactions, and it's only a matter of time before they pass that information on to law enforcement authorities for whatever ridiculous "justified" reason they target people these days.
I apologize if this has already been posted.
I suspect that when it comes down to it, it's difficult to make a case for not automatically sending this information when the equivalent systems are so well established elsewhere in the tax system.
The other side of this is that the detail of information being requested does seem massively excessive if it's just intended as a check upon undisclosed cashflow. If a merchant does $35,000 of sales through PayPal in a given financial year, that's all that the IRS needs to know in order to know if the tax return has included all the income. Why does the IRS need to know that you sold three Widgets to Mr. Brown for $9.99 each?
Personally, I think that business privacy is important, not to allow tax fraud, but to allow entirely legitimate tax planning to be conducted without becoming a target for the next change in the rules.
While I think it is a pain, it doesn't appear overly intrusive because the IRS is not getting info on individual credit card transactions. And since we don't try to cheat the gov't(your an idiot if you do) , I would not have a problem with it.
First, this is how government begins is fascist "creeping" into your personal life.
"While I think it is a pain, it doesn't appear overly intrusive because the IRS is not getting info on individual credit card transactions."
Do you wanna bet?
Take the case of a retired Texas School Teacher who wanted to pay down his credit card balance with a $6,522 lump sum payment. Well, that sent off some red flags to the government and the Dept. of Homeland Security froze his check so they could make sure he wasn't paying off his credit card in support of terrorism.
They were told, as they moved up the managerial ladder at the call center, that the amount they had sent in was much larger than their normal monthly payment. And if the increase hits a certain percentage higher than that normal payment, Homeland Security has to be notified. And the money doesn't move until the threat alert is lifted.
Walter called television stations, the American Civil Liberties Union and me. And he went on the Internet to see what he could learn. He learned about changes in something called the Bank Privacy Act.
"The more I'm on, the scarier it gets," he said. "It's scary how easily someone in Homeland Security can get permission to spy."
Eventually, his and his wife's money was freed up. The Soehnges were apparently found not to be promoting global terrorism under the guise of paying a credit-card bill. They never did learn how a large credit card payment can pose a security threat.
Government creeps it's way into a totalitarian role through these seemingly justified pieces of legislation. If the IRS get's it's hands on this data, it's bound to turn it over the homeland security deparment which also gets information from your credit reports.
Second, it's sad that the government has to enact this unjustifiable regulation to nickle and dime common citizens to get $10 billion - when they never, ever make cuts to their spending and the size of government only creeps bigger and bigger.
Although I agree people should not cheat on their taxes, in the end, we all lose more freedoms through these kinds of piece of legislation and regulation.
requirement that all electronic payment processors send detailed transaction data to the federal government