New Law Requires Credit Card Companies, PayPal to Report Merchants' Income to IRS

[mandy]

The Bush administration is proposing a new tax collection program that would force credit card companies to report merchants' income to the Internal Revenue Service. The plan has come under fire from privacy groups, who say it will create another private sector database tied to Social Security numbers at a time when ID theft experts are urging companies to wean themselves from the use and collection of such information...

According to an analysis by the Center for Democracy & Technology, the proposal would require credit card companies to report the aggregate transactions of all businesses that have merchant accounts with the card issuers. The reports to the IRS would be tied to each merchant's taxpayer identification number. The problem is, in many cases, small businesses use their owners' Social Security numbers as their taxpayer ID...

full article: http://blog.washingtonpost.com/securityf...v=rss_blog

[mandy]

More info:
Increased Information Reporting on Electronic Payment Transactions
Harmful to Micro-Business
http://www.taxcompliancefairness.org/NR/...ummary.pdf
Fact Sheet on Payment Card Reporting
http://www.taxcompliancefairness.org/NR/...ePager.doc
Senate Housing Bill Requires eBay, Amazon, Google, and All Credit Card Companies to Report Transactions to the Government
http://www.freedomworks.org/newsroom/pre...ss_id=2571

more links here: http://www.taxcompliancefairness.org/portal/tax/default

A related article:

eBay spokesperson Kim Rubey issued a statement to AuctionBytes responding to the proposed legislation:

We believe that IRS proposals to collect additional information about electronic payments, including the "merchant card reporting" provision recently attached to legislation being considered in the House and Senate, should be crafted in a manner that does not discriminate between payments models and should not burden the smallest entrepreneurs with new tax compliance demands, nor inappropriately raise reporting requirements on persons who are not merchants. We are actively conveying our views to congressional leaders so that legislation does not overreach and negatively impact individual Internet users, the growth of small businesses, and entrepreneurial and economic empowerment.

full article: http://www.auctionbytes.com/cab/abn/y08/m06/i23/s03

[sneakymagenta]

The problem is, in many cases, small businesses use their owners' Social Security numbers as their taxpayer ID...

How boinking hard is it to pick up the phone or apply online and get an EIN for your business?

[mandy]

Update: the bill was signed into law and takes effect in 2011

You might have heard that Congress recently passed the Housing and Economic Recovery Act of 2008, a major housing bill that the President signed into law on July 30.  The bill contains a provision impacting PayPal and our merchant customers, so I wanted to explain the requirements and what they mean for some of you.

Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:

   1. receive more than $20,000 in payment volume in a single year; and
   2. receive more than 200 payments in a single year.

This legislation applies to all payment providers including PayPal and takes effect in 2011, so the first reports will go to the IRS in January 2012.  Our goal when the legislation takes effect is to make it easy for PayPal merchants who fall under the provision to report their taxable incomes.

full article: https://www.thepaypalblog.com/2008/08/pr...ecome-law/