Housing Rescue Bill
Today’s economy gives new meaning to the phrase what goes around comes around. The new Housing Rescue Bill has turned into the Salem Witch trials for merchants and the payment processing industry. The Housing and Economic Recovery Act of 2008 was intended to help homeowners on the verge of bankruptcy and foreclosure and to calm the overall real estate market. Politics unfortunately comes at a price, and nothing is certain but death and taxes. With this new Housing Rescue Bill tax laws were changed and some speculate for the worst.
One of the tax laws that were amended involves the tracking of credit card transactions. Credit card processing companies will now be required to send a report to the IRS and the merchant with total annual gross payment card receipts. Merchants are worried about higher costs incurred under the new rule. The credit-card companies or the banks are going to have to build this reporting system out and that cost is likely to be passed on to the merchants.
Some major items that will affect the way merchants do business are:
- Merchants will have to make sure their bookkeeping is accurate and up to date.
- This law only applies to businesses that are running 200 or more transactions and generating $20,000 or more in volume.
- This new tax law will be in effect as of January 1st 2009.
- Merchants should be sure to reduce the total income on the report they receive by their amount of refunds and credits.
- Keep in mind the IRS can now step in and audit your credit card processing receipts at anytime without notice.
The American Bankers Association, along with other groups, wrote a letter to lawmakers saying “This burdensome unfunded mandate would impose hundreds of millions of dollars in costs on the business community. In order to comply with this mandate, the payment card industry and its third-party processors would be required to fundamentally redesign card processing systems that were developed to accommodate the efficient and reliable processing and settlement of transactions between consumers and merchants.”
Some speculate that the costs will be passed on to the consumers in the end as well.
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