This ought to be way off-topic for us, but since this strange provision got slipped into the housing bill, we are going to ask "Why"?
Here’s the Senate summary: [The wording is going to make your eyes glaze over, but honest, this is worth staying awake for]
Revenue Provisions
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.
This bill has a provision that reporting would be required by credit card companies and electronic payment processors, such as PayPal, to file aggregate transaction reports with the IRS listing their total annual payments to individual merchants who receive more than $10,000 and that conduct more than 200 transactions each year. ***
The Bill requires transactions be reported including the reporting of the identity of the receiving party and their taxpayer number. This burdens banks, credit card companies and any financial arrangement company, will be more than onerous and likely to cause an increase in every online purchase. That is going to translate to higher costs on everything- aside from the issue of gathering all the consumer purchasing history.
It will be interesting to see what lobbies come forth to oppose this inclusion and if they will be successful in removing this provision from the final bill before passage. I scratch my head in wonder as I ponder what this sort of information acquiring has to do with foreclosures and the attempt to minimize them- which was supposedly the intent of the bill. I would also love to know who proposed such a thing in the first place. Getting that legislator some well deserved publicity would be interesting as well. If this sort of thing is so desirable for passage, it should be in a stand alone bill, then debated and passed or not passed on its merits. Hiding it in another bill should not be allowed.
[***Note: Johnson's original post stated that all online purchases would be reported, which is incorrect. He has edited his post, and this has been edited accordingly.]
I agree 100% with Johnson. This provision has no place in a housing bill. [Or any bill, for that matter-- but I digress.]
It’s bad enough that Congress is rushing to put this lender bailout bill into law, without taking away our rights against unlawful search while they are at it.
If you didn’t see a reason to oppose this bill before, maybe you do now.
I first read about this at digg, then went to azcentral.com to see if they report this too. Sure enough, there is a story about the housing bailout bill but none about this credit card reporting.
I understand that this is a common thing now. Slip an unpopular or unrelated clause in a bill that would highly get passed. What a shame.
This provision is a good thing. There is a ton of unreported income flowing through the payment system by small businesses or individuals selling goods but not reporting the income. The IRS put this provision in the bill so that they can match the on-line sales/paymenets running through the financial system with what these persons/companies report on their tax returns. The revenue estimates in the bill is the estimate of unpaid taxes. We should all hope this makes it into the final bill and the only people not supportive are payment processors who have extra reporting requirements if it’s passed
Tax dead beats, go for it.
You use the system, you need to contribute. It will be a way to target Tax Audits. Same as you never could use cash for home purchase. This is a capital community and if you are using it, you need to pay to support it.
More important to AZ real estate is on Sept 30th. Minimum down payment goes to 3.5% and DPA (down payment assistance eliminated). 80% of transactions are FHA insured.
How about Conforming limits going to 1.15% of local Median house price? Conforming limits might be dropping in AZ and going up in CA. Many will have a window of Sept 30th or Dec 31 to act.
First time home buyers will benefit with an 7,500 tax credit.
you guys are right it is to get the tax cheats and it is in the housing bailout bill to see who lets their home go back to the bank and is making tons of money on the side. We are watching history - the nationalization of the banking and mortgage industry.
The big pocketbook bailout of the federal government comes with all the regulation strings attached. This is just the beginning.
The fed is amazed that loans were only written with housing appreciating as the standard and no rules for it depreciating. There is absolutely no penalty for walking away from your mortgage debt.
Once they take over and you get a government loan for your home that won’t be the case. Like the old school loans the IRS will follow you till you die if you walk away from a federal loan. History boys and girls, front row seat.
Whether this is good or bad doesn’t seem to be the issue. The issue seems to be relevance. There is so much slime going on right now I want to know who is pushing this stuff. This should be a stand alone issue.
I’m okay with it.
This would never pass on its own seeing how many people & companies do cheat on their taxes.
I don’t cheat on my taxes & anyone who does deserves to get caught
First time home buyers will benefit with an 7,500 tax credit.
They may be tricked, but it’s not a tax credit. It’s a $7,500 interest free loan from the government that gets paid back at $500 each year. If you sell or rent the house before it’s paid off (15 years), you must pay it back immediately. I also still don’t see how this money could be used as a downpayment, which is the big reason houses aren’t selling.
More Government FUBAR regulation- and too late.
I agree with Jordan … Tax “Credit”.. pffft. I prefer to call them Blue Sky Interest bearing credits. (Roll the money presses!) I wonder where we can find this new tradable derivative product… a Circle K POS checkout maybe? Wake me up in decade.
By all means prosecute tax evaders- but we need to be careful when we give the government the power to track us all to find them.
“Why not let them check when you haven’t done anything wrong?” has always been dangerous philosophy. There was a time when British soldiers could enter any home in the American colonies on that premise- but our forefathers decided they would rather live in a world where just cause needed to be shown first, and that’s the world I want to live in.
When you think that doing nothing wrong can keep you safe, remember your English history. Had they had databases at the time of Queen Mary, being in the database as “Catholic” would have been safe, being “Protestant” could get you killed. Later under the reign of Queen Elizabeth things reversed. A lot of people died agonizing deaths in those times for doing nothing wrong. The odds are you won’t get burned at the stake anymore, but that doesn’t mean your personal information can’t be abused and used against you.
All nations have some rulers that were better than others. I believe it safest to never give your leaders any more power than you would like the worst of them to have. Whatever you think of the current administration, the next one could always be worse.
Additionally, I don’t like tracking spending to determine income just based on my own experience. It is not necessarily accurate.
Years ago Mr. Twist had a job that required him to travel constantly, and he frequently had to entertain customers. He traveled internationally as well as domestically, so some months he spent thousands on tickets, hotels, rental cars, restaurants, etc. All of this went on our personal credit card, which was reimbursed by his company.
It was not uncommon for his monthly reimbursement check to exceed his paycheck. We often remarked that we were glad Uncle Sam didn’t see these bills- they would wonder how we managed to charge more than we made and pay it off every month.
Where do we want it to stop if our purchases can be tracked? Do we want them analyzing our purchases for potential illegal activity?
I for one believe it safer to give this sort of information to the government on a “need to know” basis- and they don’t need to know the spending habits of the majority of law abiding, tax paying Americans.
Lastly, there is the point that Johnson made-
This has nothing to do with housing, and should be a stand alone bill based on its own merits or lack thereof- not crammed down our throats in the interest of rushing to bail out Wall Street investors- I mean suffering homeowners.
This doesn’t belong in this bill.
It’s important to ask yourself why things are done.
Supposedly, this bill is costing 40 Billion Dollars, yet it raises the debt ceiling by 800 Billion Dollars. This indicates that they are planning on spending (over time) 800 Billion Dollars, not 40.
Why would they add this provision now - tax cheating has been going on for some time. Tax cheating wasn’t worth sacrificing constitutionally-protected freedoms before, why now?
Both provisions make sense (from the government’s perspective) - if one looks at the long term. Our government is working hard to maximize consumption (to prop things up) - that’s the reason for bills like this, and the “stimulus checks”.
Citizens insist on things like “saving”. Given a tax savings of X, they will go out and spend less than X - like many people who put their tax stimulus checks towards debt, or in the bank. Saving is good for the individual, but bad for the short-term economy, since our economy is built largely on people buying things they really don’t need. In other words, In order to keep spending up, the government will have to spend our money for us. They do this through direct taxes, and inflation (indirect taxes).
This bill makes perfect sense, if the goal is to significantly jack-up taxes long term, and encourage more senseless spending on depreciating assets like real-estate. The higher the effective tax rate goes, the more inclined people will be to cheat, since they have more to gain from doing so.
Put it another way - who would risk jail time to cheat a 1% tax? Who would risk jail time to cheat a 50% tax? See why this bill is important?
Somebody flip a steak into the admin’s cage to get him back in there (kidding). I have just been fonted into blindness.
I agree, in the electronic age, there are too many transactions without a paper trail. The bill will definitely help collection efforts.
I also think we need to stop thinking of the government as “them”. “Saving is good for the individual, but bad for the short-term economy” - if we are dependent on the government to be the employer of last resort, America is gone. Raise taxes on high-income earners (oooh, I hate to say this, but, “The Obama Plan”), DRASTICALLY reduce military spending, put some means testing on other government programs, and the resulting dollar strength and movement towards a balanced budget will help us at least make an effort to get out of the long-term cesspool we are in. Otherwise, welcome to the Roman Empire.
Agnostic-
I think he’s just showing off his HTML- he knows I’m hopeless without an editor.
John’s HTML is far superior to mine as well- but he’s more humble about it. : )
Twist calls it. This is no time to slip in an unpublicized provision for the government to track spending, and to say this is a slippery slope is an understatement - this is only a quarter step away from having the IRS review every single transaction you engage in. Can you say 1984?
Ok, first of all, gvmt is not tracking spending, they’re tracking selling. They want to know if you’ve sold $50K worth of used goods on ebay that you report $50K of sales on your tax return. They don’t care who purchased it and they aren’t asking for that info.
Secondly, this information is already available to the IRS. I work for a bank and if the IRS wants to come in and look through credit card transactions and get the names of the buyer/seller they can. This bill just makes it manditory that companies pass the info along and sort it for the IRS. It just makes us an extension of the IRS in a sense.
Finally, provisions like this get stuffed into bills all the time. It’s unfortunately how our government works and fortunately, in my opinion, it actually works this time
Jim -
First thing I do when I go to work for the IRS
is find your IP address 
and hit you with an audit and mebbe about 8 gajillion superfluous actions. Have a great Friday 
Hahahahahahahahaha
Seriously, though, I think zero is right, this is more about reporting income on the part of the seller. I’m against government intrusion of all stripe (even though I don’t have acid parties in my back yard), but I think the cheating that goes on is rampant and needs to be stopped or at least curbed.
Jim,
OK George. I’m getting it. Banks are the Government.
Fortunately I’m so freaking conservative in my dealings with the IRS that an audit would almost certainly reveal an overpayment on my part. (When I was a kid, we had a family friend go to prison for failure to give Uncle Soprano, er, Uncle Sam his cut. As a result, I didn’t even itemize deductions until my state taxes alone got high enough to exceed the standard deduction…) In any case, lacking any good deductions to speak of, and being on salary, I have no good way to cheat the system. But even if I’m paying 110% of my taxes, I still don’t want the IRS filtering through everything I buy, which is the next logical half-step from what this bill requires.
First, we want to install cameras everywhere with face-matching software, but just to look for “terrorists” of course. Now, we want to be able to listen to your phone calls and read your email without even so much as showing a judge why we should. (Remember - a judge will issue a warrant for probable cause, so if they don’t want judges involved, it’s because they know they’ll be using the system when there isn’t probable cause.) Now, we want to know every single thing you buy, ever. In all seriousness, how far are we away from 1984? Not far, IMHO. Certainly a damn sight closer than even the old soviet union was, because they lacked the technology to really watch in the way our government is starting to do now.
Igor says: annoyed
Jim,
I’m all for doing anything to stop terrorists. Regretfully they are the ones with the rights.
George, while reading your book I developed a morbid fascination with gin. Please help me stop.
Freemonster-
If we allow ourselves to turn into an Orwellian society in an attempt to stop terrorists, they have won.
As my son pointed out to me once-
We now spend hours and hours in lines at airports to “protect us” from terrorists. If you consider a lifetime in terms of hours, we are losing more “lives” standing in line than we did on 9/11.
One of the dangers of living in a free society is that people are more free to be involved in terrorist activities.
I won’t do “anything” to stop terrorists. When we hit that point, we have become one of them.
[Igor says "bummer"]
Twist,
I respectfully disagree. When you see them targeting children and anyone else that’s vulnerable to their sociopathic ways you’ll take a 2nd look also. If I had children(I don’t) and some freak in a burka, with concealed bombs strapped to herself, blew up a gathering of children including my child I would do very bad things. We all need to apply the reasonable person theory and get off all this feel good stuff. It’s real easy to take the high road now. But it’s coming.
Freemonster-
I have five myself, and would like to see them enjoy the freedoms I have.
We have gone so nuts in our persuit of terrorists that we do things like select small children for “special security”. My tiny seven year old niece was once taken for SS and my sister was not allowed to go with her. She was crying buckets as they were frisking her. That is terrorizing our children as far as I’m concerned- and I doubt America is a safer place because we do it.
“Reasonable” is right. My children are far more in danger statistically speaking from red light runners than from terrorists- but do we ban all cars to prevent this from happening?
I’m not for ignoring the problems, but a “do anything to stop them” approach has it’s own issues.
Twist,
I’ve never heard of such insanity. Obviously if that happened to a loved one of yours, all of our hearts would go out to you. That makes no sense and actually sounds very very illegal. I can’t imagine anyone taking a child away from a mother unless the mother was charged with a crime and they took the child to protective services. That said, someone wearing clothing that can conceal bombs should be scrutinized. And that person should be thankful for the safety that we require from our government. It just drives me crazy when people from a totalitarian society use the freedoms of our society against us. You’re right. Right now red light runners are more dangerous. There may be a reason why.
As for this ss. I’m heading to google. I’ve heard of little ol’ ladys. Which is ridiculous. But a 7 year old?
Freemonster-
My nephew was selected at 18 months- but they let my sister go with him. [He had a one way ticket.]
A friend was flying with her Shih Tzu, and the dog was selected. [I didn’t know dogs could, but apparently if they fly in the cabin, they have boarding passes and are subject to special security as well.
So these aren’t urban legends, these are friends and family.
I suspect lots of folks have had similar problems flying.
I basically choose not to fly when possible - the hassle and indignity is not worth it.