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an explanation -- Senate Bill Requires eBay, etc., All Credit Card Companies, to Report Transactions to Government
From: David Farber <dave () farber net>
Date: Fri, 20 Jun 2008 12:32:23 -0700
________________________________________ From: Larry Tesler [tesler () nomodes com] Sent: Friday, June 20, 2008 3:19 PM To: David Farber Subject: Re: [IP] Senate Bill Requires eBay, etc., All Credit Card Companies, to Report Transactions to Government Dave, This press release may simply be a smokescreen thrown up by Dick Armey to try to derail the Housing Bill, which President Bush has threatened to veto but the Senate has enough votes to override. Dodd's runs the Committee on Banking, Housing, and Urban Affairs so it is not so surprising to see a banking provision in the bill. Earlier this week, the issue that opponents raised was that Countrywide Bank might somehow benefit from the bill. The issue they raise below is that large merchants who fail to report large sales paid by credit card may get caught by the IRS--beginning in 2011, if the bill is not revised before then. According to them, the right to conceal such income from the IRS is a "privacy right". As every American worker knows, employers have to report annual wages to the employee and to the IRS on Form W-2 so that employees can't hide employment income. Similarly, payers of dividends, interest, consulting fees and other kinds of non-payroll income must report such payments, on an annual aggregate basis per payee, to the IRS and to the payee, on Form 1099. It appears from the bill summary that its authors want to make it similarly difficult for at least some merchants to avoid taxes by failing to report large sales. For example, if you are a merchant and your customer uses a credit card to buy an item costing more than $10,000, the merchant bank (or other payment clearing entity) may have to aggregate that purchase into an annual report that they send to you (the merchant) and the IRS. The report would not identify the buyers, only the seller, and would not list individual transactions, just totals by merchant. Wher might privacy issues actually surface? It seems to me that if there is an IRS audit, in addition to reviewing the merchant's business records as the IRS can do today, the IRS could also review the merchant bank's records, which would name buyers. However, such an audit would reveal no information that an honest merchant would have had to show the IRS auditor anyway. I'm not sure which upsets Armey more: the closing of a loophole that a few dishonest businesses use to evade $1 billion a year in taxes, or a bipartisan effort to lessen the pain of the housing crisis. He seems to be unhappy about both. Larry Tesler ----- Original Message ---- From: David Farber <dave () farber net> To: ip <ip () v2 listbox com> Sent: Friday, June 20, 2008 12:54:24 AM Subject: [IP] Senate Bill Requires eBay, etc., All Credit Card Companies, to Report Transactions to Government ________________________________________ From: Gregory Hicks [ghicks () well com<mailto:ghicks () well com>] Sent: Friday, June 20, 2008 2:49 AM To: David Farber Cc: ghicks () cadence com<mailto:ghicks () cadence com> Subject: Senate Bill Requires eBay<http://www.ebay.com/>, etc., All Credit Card Companies, to Report Transactions to Government Dave: For IP if you wish. Regards, Gregory Hicks From: "R.A. Hettinga" <rah () shipwright com<mailto:rah () shipwright com>> Date: Fri, 20 Jun 2008 00:55:34 -0400 <http://www.freedomworks.org/processor/printer_press.php?press_id=2571> FreedomWorks June 19, 2008 Senate Housing Bill Requires eBay, Amazon, Google<http://www.google.com/>, and All Credit Card Companies to Report Transactions to the Government Broad, invasive provision touches nearly every aspect of American commerce. Contact: Adam Brandon Phone: (202) 942-7698 Email: abrandon () freedomworks org<mailto:abrandon () freedomworks org> Washington, D.C. - Hidden deep in Senator Christopher Dodd's 630-page Senate housing legislation is a sweeping provision that affects the privacy and operation of nearly all of Americas small businesses. The provision, which was added by the bill's managers without debate this week, would require the nation's payment systems to track, aggregate, and report information on nearly every electronic transaction to the federal government. FreedomWorks Chairman Dick Armey commented: "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<http://www.paypal.com/>, Amazon, and Google Checkout that are used by many small online businesses. The privacy implications for America's small businesses are breathtaking." "Privacy groups like the Center for Democracy and Technology and small business organizations like the NFIB sharply criticized this idea when it first appeared earlier this year. What is the federal government's purpose with this kind of detailed data? How will this database be secured, and who will have access? Many small proprietors use their Social Security number as their tax ID. How will their privacy be protected? What compliance costs will this impose on businesses? Why is Sen. Chris Dodd putting this provision in a housing bailout bill? The bill also includes the creation of a new national fingerprint registry for mortgage brokers. "At a time when concerns about both identity theft and government spying are paramount, Congress wants to create a new honey pot of private data that includes Social Security numbers. This bill reduces privacy across America's payment processing systems and treats every American small business or eBay power seller like a criminal on parole by requiring an unprecedented level of reporting to the federal government. This outrageous idea is another reason to delay the housing bailout legislation so that Senators and the public at large have time to examine its full implications." From the Senate Bill Summary: Payment Card and Third Party Network Information Reporting. The proposal requires information reporting on payment card and third party network transactions. Payment settlement entities, including merchant acquiring banks and third party settlement organizations, or third party payment facilitators acting on their behalf, will be required to report the annual gross amount of reportable transactions to the IRS and to the participating payee. Reportable transactions include any payment card transaction and any third party network transaction. Participating payees include persons who accept a payment card as payment and third party networks who accept payment from a third party settlement organization in settlement of transactions. A payment card means any card issued pursuant to an agreement or arrangement which provides for standards and mechanisms for settling the transactions. Use of an account number or other indicia associated with a payment card will be treated in the same manner as a payment card. A de minimis exception for transactions of $10,000 or less and 200 transactions or less applies to payments by third party settlement organizations. The proposal applies to returns for calendar years beginning after December 31, 2010. Back-up withholding provisions apply to amounts paid after December 31, 2011. This proposal is estimated to raise $9.802 billion over ten years. --------------------------------------------------------------------- I am perfectly capable of learning from my mistakes. I will surely learn a great deal today. "A democracy is a sheep and two wolves deciding on what to have for lunch. Freedom is a well armed sheep contesting the results of the decision." "The best we can hope for concerning the people at large is that they be properly armed." --Alexander Hamilton ------------------------------------------- Archives: http://www.listbox.com/member/archive/247/=now RSS Feed: http://www.listbox.com/member/archive/rss/247/ Powered by Listbox: http://www.listbox.com<http://www.listbox.com/> ------------------------------------------- Archives: http://www.listbox.com/member/archive/247/=now RSS Feed: http://www.listbox.com/member/archive/rss/247/ Powered by Listbox: http://www.listbox.com
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- an explanation -- Senate Bill Requires eBay, etc., All Credit Card Companies, to Report Transactions to Government David Farber (Jun 20)