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IRS Pushes for New Reporting at Expense of Privacy
angelheaded writes "Brian Krebs from the Washington Post is reporting that 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."
How would they figure the tax from the merchant's credit card revenue? They could have very high revenue, but low profits, or vice versa. You wouldn't be able to tell only from their CC processor history.
The privacy issue is not a concern either. Even if it is a small business using the owner's SSN the IRS already has that info on tax forms, W2s, and other data they get from banks. This personal information will not be shared with anyone outside the IRS anymore than one's 1040 is.
I'm not american, but don't understand the outrage. surely this is an attempt to 'catch' those people who are making a fortune selling stuff on ebay etc, without ever declaring the income through their business or paying any corp tax.
As a small businessman who pays every penny of tax as I should, I'm behind any method that helps catch those swine who can undercut me by not paying any tax.
Since when is it cool to stick up for tax cheats?
What am I missing?
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Surprised? No.
Why is it news? Because that's our only hope of changing the behavior for the better.
I get where you're coming from but I have to admit, I'm really discouraged every time we hear one of these stories and the first thing you hear is a chorus of sarcastic, "what a shock!" responses.
This is news because this is something that should upset us enough to actually provoke us into ACTION. Writing our senator. Going to a senator's office. Threatening to withhold our significant or not-so-significant campaign contribution from their next election. Anything...
But every time we resign ourselves to reply to outrageous behavior with sarcasm or disinterest, we speed up the day when we'll have nothing to be upset about... because we'll have no say in the matter and our kids will have been lulled into not caring from a young age.
You know, I don't see how this is any different then requiring an employer to submit a 1099 for contract workers and other similar paid people. I mean the changes are so it reports the total amount of sales (income) a merchant or business owner has made through a credit card account. It would almost be the same as the card companies issuing a 1099 to the merchants.
The call to arms about social security numbers is a little weak too. I mean it isn't like the US government (IRS) doesn't already have the numbers when anyone else does a 1099 or they report their own income. All that would be necessary is for another field in an existing database to be set with a "credit income" tab or something and treat it like all other IRS information.
The people who are really at risk here are the ones who sell things on line and don't report it to anyone. That is why there is a big problem with it. Now, If your going to be doing any business with people paying you by credit cards, your going to have to report it in some way. The fact that small businesses use their SS number as their TIN number is sort of irrelevant, the IRS would already have that information anyways. The credit card companies would already have that information stored for a year or more anyways too. The only difference now is whether the government gets information on the amount of sales you do by credit cards or not. That is the only material change in this.