A Warning To All Merchants – The IRS is Getting Set To Over Tax Merchants
Fire Your Stupid Congressmen
A sneaky provision was added, by Stupid Congressmen to the The American Housing Rescue and Foreclosure Prevention Act of 2008 that could generate supplementary revenues of up to what the IRS estimates will be $9.5 billion over 10 years – and this time its target is electronic transactions.
The new law, voted in by Stupid Congressmen is designed in part to provide additional tax credits for first-time home buyers, finance the construction of low-income housing and broaden deductions for state and local property taxes but the sneaky provision was addedby Stupid Congressmen as a $9.5 Billion revenue generator tactic.
HR 3221′s Section VII, entitled “Revenue Provisions: Information returns for merchant payment card reimbursements,” requires “institutions that make payments to merchants in settlement of payment card transactions” as well as “information returns for payments in settlement of certain third-party transactions that operate in a manner similar to card transactions to file a return” with the IRS. Of course, this is unjust as any IRS auditor can pull your statements from your bank and ask for an accounting.
An intelligent Congressman knows that if a merchant was really skimming their till, it would most likely be a cash or barter transaction, not an electronic transaction. This requirement, pased by Stupid Congressmen, is supposedly seen as a means to close the gap between taxes the government “believes” it should be collecting and what it “actually” receives. The manic bean counters and Stupid Congressmen that came up with this scheme should immediately be deported to the nearest Marxist nation. Merchants are over regulated now! But here is where caution must be exercised. The reporting that is required will cause many merchants to overpay their taxes, as electronic transactions will be double counted. Once from your deposits and the second time by your merchant services provider, unless we all contact our Intelligent Congressmen and Stupid Congressmen and make them repeal this unnecessary law.
Paul Martaus, President of consulting firm Martaus & Associates, sees this law as the U.S. government putting the onus on the payments industry to monitor merchants. “I believe this law makes the payments industry the merchant bank,” Martaus said. “Moreover, it makes them an agent of the Fed to spy on and basically rat out the retailers.”
rtney believes this law might be the beginning of more oversight. “If we’re responsible for telling the IRS what we’re paying our merchants and becoming an involuntary regulatory agency, won’t this open the floodgates for other regulation?” Fortney asked. But the Stupid Congressmen won’t care unless you have the courage to call his or her attention to this act of stupidity.
“And what will be the penalty if the bank misquotes or the financial institution forgets to send the information on? Who is liable? Those are my concerns, and these issues have yet to be addressed.”
The law, as it is now written by Stupid Congressmen, contains no reporting guidelines and is causing confusion, anger and trepidation among those who will be charged with addressing reporting issues – including the costs associated with it. Reporting guidelines are expected to be published by the IRS later in 2009, thanks to Stupid Congressmen.
Payment industry professionals – and even organizations that represent merchants and consumers – are uncertain as to how this law is going to be implemented, regulated and monitored, how settlements with alternative payment options will be addressed, and who will be the responsible reporting parties.
John C. Nix, Senior Vice President, International Sales and Marketing for Data Delivery Services Inc., said, “One thing I find interesting is that when the government stepped in on behalf of the Wal-Mart case years ago, where they were basically attacking interchange … you have the government, who has been on the merchants’ side for years, and all of a sudden they’re now getting into the tax business on transaction reporting.
“They want to lower interchange to make merchants happier, but on the flip side they’re now increasing [the merchants'] tax liability and making many players in the payments industry responsible for that. The livelihood of the [payments] industry is already being threatened. Now this added burden. As you can see, it’s a very strange dichotomy.”
On Feb. 20, 2009, the IRS issued Notice 2009-19, asking for comments on future guidance concerning the rules for transaction settlement information reporting. In an April 23, 2009, “text daily” to the NRF, concerns relating to the implementation of section 6050W of the IRS tax code were submitted by several credit card companies, banks and universities. It is past time to notify your local Congressman to take this bill down and cut out spending money we don’t have! Educate those Stupid Congressmen so they can become Smart Congressmen or just Fire your Stupid Congressmen.
Section 6050W requires card service providers and third-party processors to provide the IRS with information returns for any merchants with sales of more than $20,000 a year or more than 200 transactions annually. These rules pertain to credit and debit transaction processors as well as third-party payment settlement companies like PayPal Inc., which processes transactions for banks that have contracts with merchants to accept their cards.
Many of the groups that wrote to the IRS pointed out the possibility of duplication between section 6050W and other sections of the tax code. According to Darren Parslow, Visa’s Head of Global Commercial Products, every payment card transaction reported under Sections 6041, 6041A and 3402 will wind up being reported a second time under 6050W as it is now written.
“Reporting under various code sections will create confusion for taxpayers who receive two returns for one transaction,” Parslow said. “In those instances, there is a possibility of double withholding of up to 56 percent in a single transaction.” Visa recommended the IRS change the rules to exempt reporting under the other code sections if the transaction is reported under 6050W.
Visa also urged the IRS to develop a new form to be used solely for reporting under the new tax code to reduce confusion and double reporting of income on Form 1099-MISC under tax code 6041. Furthermore, Visa asked the IRS to be lenient with the transition and penalty rules for the first year or two and requested the IRS engage in aggressive, consistent outreach to the payment settlement community.
“Clearly we agree everyone needs to report all their income,” Bernstein said. “What we have addressed in these comments are problems about how the system might overreport for merchants who are fairly paying their taxes, and why poor implementation could cause more audit activity. The real issue is what the best solutions are for honest merchants.”
However, Melody Wigdahl, Global Merchant Sales Director at UseMyBank Services Inc., does not believe the new law is directed at “traditional” processors or financial institutions. She thinks it is meant to corral alternative payment processors that cater to the thousands of home-based Internet businesses.
“These days it is not uncommon for a small business to operate entirely through their PayPal account,” Wigdahl said. “And since those funds are easily accessible with a PayPal debit card, you don’t even need to transfer funds into your bank account.
“Unfortunately, there is a potential for massive amounts of double reporting of income. And it’s not the processors’ fault- it’s more that the IRS, with this provision, doesn’t really understand or take into account the business niche that companies like this service,” she added.
On April 3, 2007, Carla Balakgie, Executive Director of the ETA, wrote a letter to the U.S. House of Representatives Committee on Ways and Means, Subcommittee on Oversight, stating that the burden this requirement would place on the payments industry – as well as small businesses – will outweigh any benefits from information reports.
Balakgie suggested the law is “ripe for abuse” and that “it is not practical to expect the IRS to be an expert on the spending habits of individuals and businesses.” This is why our Stupid Congressmen needs to read these bills and consult with us the people before sneaking in hidden tax increases.
This will become an accounting nightmare as the ETA reported, transaction volumes can be adversely affected by cash back options on purchases, returns and chargebacks, redemption of gift cards purchased in one tax season and redeemed in another, and retained merchant fees (terminal rentals and customer services) that illustrate why a single aggregate number may provide misleading information.
In the long-term, Samuel believes significant additional costs could be incurred by payment processors and merchant acquirers if they are designated as the responsible reporting parties by the IRS. “Processors generally have not tied a merchant’s TIN or Social Security number with transaction data,” he said. These additional overhead expenses, which are required to comply with this sneaky law will add an even greater burden to customers as merchants will also have to pass the overhead on. There is no additional value added to the service or product, just additional overhead which helps depress the economy even more! We ought to be looking for ways to reduce merchant overhead, not increase it. Maybe it is time to fire your Congressman or Congresswoman! Sent the tax and spenders home! (or to Europe)
Samuel added that merchant identification numbers were established to identify merchants and transaction data and have no relation to a particular TIN or Social Security number. Consequently, the law could result in significant additional administrative and personnel costs to match TINs with merchant locations and their transaction data.
“Additionally, the law’s provision mandates acquirers and processors to impose withholding penalties of 28 percent on merchants whose TIN or SSN does not match what is on file with the IRS,” Samuel said.
“This could put increased financial pressure on already struggling merchants who could face higher payment acceptance costs to offset the costs acquirers and processors will have to bear to comply with the law.”
Wigdahl believes additional costs could be incurred for new reporting infrastructures but feels that those costs should be minimal. She is more anxious about her merchants.
“If there is a case of double- or overreporting, how are small businesses going to defend themselves in the case of an audit or litigation?” she asked.
“This is more troubling to me than any cost to the industry. This could truly be a nightmare for many people who may have to hire additional outside help. It is definitely a hot topic in online small business forums, and they are seriously concerned.”
Everyone, not just the merchants, needs to write their congressmen and tell them to take down this law. The $9.5 Billion is a hidden tax increase for consumers as it will increase consumer prices as merchants have to pass on the additional expenses or go out of business.
From Publishers Weekly
In his first book, the genial cohost (“from the right”) of CNN’s popular Crossfire details his adventures in the political business and in television, from the enlightening to the downright hilarious.
Given Carlson’s conservative label, some readers may be wary. That would be a mistake. Politicians is not about bashing liberals (indeed, Carlson admits that his Ober-liberal cohost James Carville is “one of my favorite people”), but about the colorful and at times irreverent people who make politics so interesting-and entertaining.
The author reserves his criticism for stuffy politicians who take themselves too seriously, and he lavishes praise on those who make good on-air guests. Among these is the convicted former Ohio congressman, James Traficant, “because he was willing to appear on television drunk.” Carlson’s montage is packed with golden political nuggets (“if you’re going to be shallow, I’ve always thought you’d better be amusing”) as well as the secret to his success (just let people talk and they will tell you everything you need to know) and funny glimpses behind the scenes at live TV, including the producer from hell, the “seven forbidden words” on television and “easy turns,” the “publicity hounds” without whom, he says, talk shows could not exist.
At times, it’s difficult to tell if Carlson is being serious or pulling your leg, but that is part of his charm. Anyone with a sense of humor will find this chronicle thoroughly enjoyable, and political junkies will likely laugh out loud more than once.
Copyright 2003 Reed Business Information, Inc.
Carlson is the conservative team member, the guy in the bow tie, on CNN’s political-debate program Crossfire. His book is both memoir and commentary on current politics and the media–all with a slant, of course. Although many readers will disagree with his attitudes and precepts, everyone has to admit he is a good storyteller, intelligent and witty and sure of himself. He recalls his climb to his current TV position, which included formative time spent on the CNN show Spin Room. In the process, we certainly learn how cutthroat the television world is.
Never averse to expressing an opinion, Carlson offers his own interesting philosophy on how to behave in front of a camera, which includes the maxim that “arguing a position you don’t really support is a sure way to wind up loathing yourself. Plus, genuine conviction makes for a good debate. Phoniness is easy to spot.” And this, too: “As the host, it’s up to you to decide what happens on the show. And no matter what the producer says, you have the power to do it.” The bottom line is, of course, that readers’ gut-level responses will depend on which side of the liberal-conservative spectrum they find themselves. Librarians should expect demand.
Copyright © American Library Association. All rights reserved
“An exciting book by an exciting author…his stature, impact and candor provide a must read for Americans of any party.” — Rev. Al Sharpton
“I begged Tucker not to abandon print for TV…but it turns out he can still write!” — Christopher Hitchens
Political pundit Tucker Carlson cracks sharp and wise on all things Wash- ington with the acerbic wit and razor-sharp insight that have made him a beloved conservative commentator. Proclaimed by NewYork magazine as the pundit most likely to succeed in these Bushian years, Tucker Carlson anchors the right side of CNN’s Crossfire aisle. An unabashed beltway insider whose profile is unmatched, Carlson stands ready to pounce on anyone and everyone who dares enter the political fray. Now, he applies his deft and amusing perspective to the goings-on in our nation’s capital.
Whether it’s the towel-snapping prowess of the President or the dumbfounding exploits of his predecessor, there is no sacred ground. A wild and informative ride behind the scenes of a cable newsman, Carlson’s debut covers his beat with equal parts hilarity and insight in a jocular review that both exposes and defends the absurdity that underlies the world of politics.
About the Author
Tucker Carlson lives in Alexandria, Virginia, with his wife and children.
Carlson might be the conservative answer to Hunter S. Thompson–gonzo journalism for those with Ivy educations and blue-blood breeding. While he revels in pranks, irreverence, and the dissection of public figures, Carlson is a savvy commentator and highly skilled TV journalist. Always clear about his objective–the irresistible story that engages his mind and sense of humor–and wisely distant from the machinations and corruption of the media, he delivers engaging and witty commentary. If you like lucid, cogent, and facetious reportage larded with personal observation, give a listen to this book. D.J.B. © AudioFile 2004, Portland, Maine– Copyright © AudioFile, Portland, Maine