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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."
They have always invaded privacy to collect money. Why is this news?
Seriously do we really need the extra tax dollars spent, man hours, and all that goes with it so the government can get more money?
I'll tell you if it doesn't pass, you will see it sooner or later under the guise of "searching for terrorist finances".
I am Bennett Haselton! I am Bennett Haselton!
It's been quite obvious in the last few years especially, that transactions on a credit card don't reflect "real" monetary transactions. How many people spend way more than they can afford, and pay back little for long periods of time. Also, it seems bad policy for a gov't to know how and where you spend money. There is no reason they should have record of that. Imagine the legal power of having records of the spending of a Senator for example. Imagine the blackmail power that would give the IRS.
I already report and pay sales tax from my income from credit card transactions.
And what the hell does the IRS care about my local city, county or state sales tax? Oh they want to make sure that I, as a small business owner, am reporting my income correctly? Fuck Off, I already do, audit me if you want you lazy fuckers, but stay the fuck out of my records unless you are doing an audit.
They can't possibly figure out my take-home income from credit card transactions anyway. They don't know if my expenses are 10% or 90% of those transactions, nor do they know how much of my business is cash or check.
Small businesses that want to hide income already know how to do this, they are cash only businesses. Allowing credit card transactions and avoiding paying taxes on that income is just asking for trouble. Well avoiding paying taxes in anyway is asking for trouble.
Let me and my accountant do our work and don't change a thing.
I can only see this leading to problems.
Not to mention that it does nothing with non-CC transactions, making this even more worthless.
Small businesses that are cheating on their taxes will still cheat on their taxes, this does nothing to help that. It only adds another layer of government involvement, and another chance for data to be lost/stolen/misused.
The Bush Administration is pushing for bigger government, great ... just great. He's a Republican too? I'm so confused.
Regardless of what they say publicly, my guess is that they are probably seeking the information not just to keep tabs on the merchants, but to keep a better lock on consumers. A lot of consumer capital goes through small business owners, that might be the people you buy groceries, liquor, cigarettes, sandwiches, meals, etc from. You do have to report how much money you earn every year, but you *don't* have to report what you spend it on (unless you write it off or it meets other specific criteria). I'll get to why that is important, later.
They can retrieve this information because from what I have gathered, they are proposing to withhold the actual receipts of sale, and the receipts would contain information regarding the two parties involved in the transaction -when, where, how much, and possibly why.
Granted, they are only proposing to hold 28% of these receipts, so this would by no means be a comprehensive or continuous record of consumer activity, but it could be used in a red-flag "Monte-carlo" algorithm-type approach - pick a few of the receipts, try to look for a few fishy ones by passing them through a filter, and then investigate (audit) any receipts that match that criteria.
For example, certain things don't need to be reported to the government when sold to an independent merchant (or even a larger business). If the seller makes a profit on the sale (assuming the seller doesn't own a small business or the sale is not related to his business), that profit is essentially invisible to the government. While in some cases this profit is taxable or not taxable (depending on what you sell) this law would make those profits visible, and would make the taxable things visible and thus enforceable. It would give an argument in Congress for those currently nontaxable profits to become taxable through an "ease of enforcement" arguement.
That being said, I don't really think the government needs to tax more than it already can and does, unless I start to see some dramatic increase in what I get out of my government, and honestly, we have other things we could be spending our money on. I'm really not worried about a business owner taking a few friends out to dinner and writing it off on his business card as an expesnse - I'm more worried about millions of dollars lost in other places.
It is not worthless data to agents who have statistical models of every small business imaginable including love offerings made to preachers to every mom and pop storefront ongoing. It is a simple thing for them with this information to flag out of ordinary transaction totals relating to sales and gross income reporting which they compare to other numbers provided on your 1040. If your credit card sales are extremely high compared to gross sales vs other busisnesses in demographic area you are a match for more scrutiny.
I agree 100 percent. This is targeted towards the internet tax cheats. No individual consumer transaction details will be tracked only the total amounts received by the merchant. People on payrolls get their taxes taken out before they even get paid. Why should the small "enterpreneur" get a better treatment?
So when are they going to ban paper money and coinage?
---- Booth was a patriot ----
Because when Social Security was first introduced, a citizens anonymity was thought to be a god-given right. It was warned by "tinfoil hat wearing nut jobs" that Social Security was evil because it required an identity card. "Your paperss pleass".
My SS card, issued in 1968, says "For social security and tax purposes only - not for identification". The newer SS cards don't say that.
Now they're trying to do away with Social Security and keep the cards. The "tinfoil hat wearing nut jobs" were right.
Before long it will be a felony to not carry identification.
mcgrew's razor: Never attribute to stupidity that which can be explained by greedy self-interest
I just don't see a flat tax, IRS abolishment, etc ever happening. I would not want to imagine the lobbying effort to quash all talk about it. Think of all the accountants, bookkeepers, H+R Blocks, IRS agents, Tax lawyers of the country that will fight tooth and nail to destroy any common sense approach.
Paul and Hucklebee both discussed the ideas during the Republican primaries. Sadly those stories didn't get much traction to really get covered. It was a perfect opportunity to have a serious discussion about it but of course the media typically ignores any real issues .