IRS Set to Begin
Monitoring Internet Transactions
Inserted directly into the housing
bailout package signed by President George W. Bush was a provision requiring
that records of merchant credit card transactions be sent directly to the IRS.
“In the past, when IRS wanted to get information from banks and merchant
accounts, it required going to a judge and getting a subpoena,” notes IRS
enrolled taxpayer representative Eva Rosenberg. “With this new law in place, IRS
can now step in and audit at any time – with little or no notice.”
The lifting of constitutional checks and
balances on IRS intelligence gathering will go into effect in 2011. The Big
Brother creeps in Congress obviously just want to extract more revenue from
business owners who may be under-reporting their income. However, the
evisceration of basic Fourth and Fifth Amendment rights has ominous implications
for all taxpayers. IRS bureaucrats will be able to go on fishing expeditions for
any “suspicious” credit card transactions and then put the burden of proof on
taxpayers to refute the government's presumption of guilt.
Under the Obama “presumption of guilt”
IRS, the tactics the agency will use to try to ensnare eBay sellers have become
ominously clear. The following is excerpted from an IRS news release dated
November 23, 2009:
The Internal Revenue Service today
issued proposed regulations under a new statute requiring that, starting with
transactions in calendar year 2011, the gross amount of payment card and
third-party network transactions be reported annually to participating merchants
and the IRS.
The provision was enacted as part of the
Housing Assistance Tax Act of 2008 and is designed to improve voluntary tax
compliance by business taxpayers and help the IRS determine whether their tax
returns are correct and complete.
“Time and time again, we have seen that
better information reporting helps the tax system work better by ensuring that
everyone pays what they owe,” said IRS Commissioner Doug Shulman. “The new law
gives us an important new tool for closing the tax gap and also provides
business taxpayers better documentation to compute and report their income and
expenses. The IRS will work closely with stakeholder groups to ensure a smooth
implementation of this new program."
These proposed regulations, posted today
on IRS.gov, propose rules to implement reporting of credit card, debit card and
similar transactions, as well as transactions settled through third-party
payment networks, such as third-party organizations that settle online
transactions. The IRS also released for comment a draft version of new Form
1099K, Merchant Card and Third-Party Payments, which will be used to make these
reports.
The new law requires banks and other
payment settlement entities to report payment card and third-party network
transactions with their participating merchants. The IRS emphasized that
individual cardholders are unaffected by this requirement, and none of the
cardholder’s personal information will be shared with the IRS.
The IRS
has created Form 1099-K, which is similar to the existing Forms 1099 used to
report interest, dividends and other payments. The first information return
covering calendar year 2011 must be filed with the IRS and furnished to
participating merchants in early 2012.
The IRS’s claim
that “individual cardholders are unaffected by this requirement” is a blatant
lie. They will be used as a revenue-enhancement tool for the IRS.
This has actually
happened to people who have sold personal collections on the Internet, never
intending to be “in business” or turn a profit. Most people probably don’t have
receipts for items that given to them as gifts years ago or that have been
collecting dust in the attic for 20 years. Under the new rules, if you attempt
to sell anything for which you lack documentation, you face potential harassment
from the tax cops are patrolling cyberspace and monitoring any and potentially
all credit card transactions.