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Payment processors, including PayPal and Google Checkout, in 2011 will be required to report information on Internet sellers to the Internal Revenue Service. The provision is expected to raise $9.8 billion over ten years in tax revenue.
Card processors and other transaction processors, including PayPal and Google Checkout, in 2011 will be required to report information on Internet sellers to the Internal Revenue Service.
The provision is expected to raise $9.8 billion over ten years in tax revenue related to business income that would otherwise not be collected. It was part of the American Housing Rescue and Foreclosure Prevention Act of 2008 signed last week by President Bush.
Under the merchant-reporting requirement, any organizations that accept credit or debit cards or third-party network transactions must report to the IRS the total number of credit and debit card transactions for each merchant that has more than $20,000 in transactions and more than 200 transactions per year. The sales of eBay Power Sellers who exceed the minimum threshold would be included.
Those organizations, including merchant acquirers and electronic funds networks, must provide to the IRS the dollar value of online credit and debit card transactions, plus other information on individual sellers, including their name, address, and taxpayer identification number.
Reportable transactions include any payment card transaction, regardless of whether the card is physically present, and any third-party network transactions, including Automated Clearinghouse, PayPal, and Google Checkout transactions.
The merchant reporting requirement, which takes effect Dec. 31, 2010, is included as a revenue-offset in the housing bill, which provides assistance for financially strapped home owners and a potential bail-out for mortgage giants Fannie Mae and Freddie Mac.