Washington – 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 America’s 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.
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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, Amazon, and Google Checkout that are used by many small online businesses. The privacy implications for America’s small businesses are breathtaking.”
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
Sorry to deflate the ideas of ebayers but there are many on ebay that manage to run a medium size business without leaving home or getting dressed. It is easier than most businesses because they can and do operate from home, save rent on a business, pay lower residential utilities and forget to pay income tax. This will cause the field to become more fair.
There is a long effort to force ebay and paypal to report 1099’s.
Between the Supreme court and the Senate – these Democratic party representatives and judges WILL TRASH the Constitution and take away all our rights – and they complain about FISA and give rights to enemy combatants beyond Geneva conventions. ELECTIONS COUNT.
Our Right to Bear Arms (2nd Amendment) is in grave danger, as well.
Anon 4:43,
Please explain. Are you saying that the ebayers that already run middle size bussiness are deflating ideas? What about the poeple that have small e-commerce sites, or any store in BP for that matter that processes cards themselves (as oposed to using Paypals services) they will to have to report. But where are they losing out (except the hassle)? Why will they be deflating? are they losing money by giving the info?
Anyone please enlighten.
Thanks.
Big Event Says:
Anon 4:43,
Please explain. Are you saying that the ebayers that already run middle size bussiness are deflating ideas? What about the poeple that have small e-commerce sites, or any store in BP for that matter that processes cards themselves (as oposed to using Paypals services) they will to have to report. But where are they losing out (except the hassle)? Why will they be deflating? are they losing money by giving the info?
Anyone please enlighten.
Thanks.
06-19-2008 – 7:21 PM
What I meant is that I am bringing bad news to those that run cyberbusiness sites and plan on hiding their business so they avoid taxes. Those that have stores and/or run credit cards thru their machines already are part of the real world and pay taxes.
NY already looks for buinesses that have stores but do not file taxes, they actually walk up an Avenue and check each store out.
How does Back-up withholding provisions apply? What is the basis for a preposterous assumption that credit card transactions are taxable income? How does a transaction reporting mechanism raise funds to the government?
1, Backup witholding sounds draconian, the idea is probably to make those with many inbound transactions on credit card merchant accounts or on paypal file tax returns to explain.
2, What reasons are there to have a credit card merchant account other than having a business.
3, A transaction reporting mechanism enables the IRS to ask merchants to file returns listing profits, if any.
How about small business retailers who DO pay taxes? Why does the gov’t think everything belongs to them even AFTER taxes?? It’s hard enough having to deal with all the Paypal and Ebay fees as it is. There’s no free lunch.
Small business owners that are legit should welcome competing on a fair basis. I have purchased on ebay and I would bet some of those guys do not report. Ebay was set up for small time people, nobody ever predicted sellers that ship hundreds of items a week. They represent real money that should be taxed.
I assume the Government only taxes profit after expenses. if you really are hurt by all the fees then you must have no profit. I am sometimes amazed by the ebay shipping costs, I assume there is profit there.
Rising shipping costs have cut down on ebay business profits.
Very few businesses that ship hundreds of items weekly can really evade taxes. After all, they usually have a legit business name, and bank account, And they have employees on payroll.
Unless you want to count the very few who manage to sell lots of items, but use bogus business names. Well that won’t change, the people will just change the way they evade taxes.
Give it some time and we will have to pay tax just to be a citizen in the USA.
9:59 said it well.
There is no free lunch, actually there is no lunch at all. The gvt monitors whatever you do anyway.
Soon we will have the honor of paying tax for the air we breathe.
yes we have to pay taxes, but can you see that slowly this countery is headed to a cumunist system, minding all off our movment.
To anon 7:56 9:17 & 10:27 Thanks for explaining so well. Its appreciated.
P.S. Are you all the same guy? Sounds like you know a thing or two.
“This proposal is estimated to raise $9.802 billion over ten years”
Who made this estimate and how was it calculated?
The first thing people need to know is that the only people that government calls greedy are people trying to keep the money they made. The second thing they need to realize is that the government assumes that people are stupid. The third thing is that they (the gov’t) think they have a “right” to your money.
Case in point: About twenty years ago the state of Florida decided that services shoud be subject to sales tax as are goods. i.e., you buy a shirt, you pay tax on the shirt. When you bring the shirt into the drycleaners, you get back the same shirt, you just pay for the service of having it cleaned. That service was non taxable. The state made it taxable thinking they could raise 500 million dollars in taxes. After all, what’s the big deal? Instead of paying $1.25 to have your shirt dry cleaned, it’ll cost $1.32. Well, when you’re speaking about dry cleaning your shirt, it’s no big deal. When you’re speaking about a company that pays an advertising firm 20 million dollars a year for advertising (a service,) you’re talking about $1,200,000 in taxes. If your talking about a coporation that spends a million dollars a year with a law firm, Thats $60,000 a year in taxes. Being that people are not as stupid as the state thinks they are, all such corporations moved there advertising and legal business to the state of Georgia, which does not tax services. The state of Florida did not raise 500 million dollars, they lost money, in addition to the billions of dollars drained from the Florida economy by the flight of business to Georgia (Georgia did quite well) The state sales tax on services was repealed, but not before the damage was done.
Second example: At about the same time, the federal government, thinking that rich people are stupid and will hand over tons of money to the Government, simply because rich people have it and the gov’t asked for it, passed a “luxury tax”. i.e.if you have money to buy a luxury item such as a 5 million dollar yacht, you have money to pay a ten percent luxury tax. However people with money are generally not stupid, and even if they are, they can pay someone else to be smart for them. Instead of buying boats in Florida, these people bought boats in Europe. 20,000 Florida boat builders were laid off. The luxury tax didn’t raise any money, it cost tens of thousands of jobs, and took billions out of the economy. Why? Because legislators are not economic scientists. They merely see someone has money and try to figure out how to take it, oblivious of the mechanisms of the economy (JFK BTW, understood this extremely well, but he was probably the last president that did.) Congress does not take into account the cost to the public of implementation. Even if it can all be done by computer, Ebay is going to have to pay programmers to write a program that records and stores every transaction for a year. Then filters out those that do not meet the minimum, electronically send it to the IRS. (BTW, Ebay handles in excess of 8 million items a day.) What happens if the companies fiscal year is not January 1 to January 1? the company and the IRS now have to break down the report for the appropriate months. What happens to the big companies that have computer recorded sales and submit the exact same number as Ebay? You jusy made Ebay police Sears and HP for no reason. What about ebay resellers that are going to have to document that 80% of the money recieved is not theirs, they pass it on to the their customers. Such businesses that make a percentage, are now going to have hire extra staff, to do the extra paper work, to police their customers. For many, the extra expense will not be worth it, they will close shop. Keep in mind, if you are an ebay reseller, you are now going to have to ask your customers for their SSN when they bring in their old beer bottles to sell. It will encourage people to create numerous ebay accounts, use their kid’s SSNs, to avoid the burden of “REPORTING”, which will be more excessive than the burden of paying tax.
Please vote for me in the next presidential election. Campaign contributions can be sent to….
What is wrong with getting people to pay the taxes they owe?
The issue here is not taxes because there is no shortage of money for any government that can print its own money. The real aim of such a heinous piece of legislation is the complete gathering of data about every individual in the country and the destruction of each human being’s independence and privacy. Blueprints taken straight from Orwell’s book 1984. Future steps include mandatory digital recording of every person’s words and actions on camera to prevent possible terrorist activities or god forbid avoidance of debilitating taxes on individuals or small businesses who are being strangled by a dangerous and defective Frankenstein we call government.
Big Event Says:
To anon 7:56 9:17 & 10:27 Thanks for explaining so well. Its appreciated.
P.S. Are you all the same guy? Sounds like you know a thing or two.
06-19-2008 – 11:54 PM
Yes, I am the same anon.
PS: I am not in the Tax, accountant nor ebay type of business.
This is why I, and so many people in the world, hate the US so much. Bullies!
Yosef,
You can leave if you don’t like it. The US is the graetest country in the face of the earth (and yes it’s better with more freedom and opportunity than the anti religious Zionist state.) The problem is the government tends to listen to a small but vocal group of liberal lunatics that do not work for a living, produce nothing but criticism, and will never be satisfied with anything, because then they will be out of their cushy job of criticizing and will have to actually got to work. G-d bless America.
Um, did anyone read the part about “A de minimis exception for transactions of $10,000 or less”? How many eBay transactions (or others that affect your life greatly) are over 10 grand?