Number: RL34464
Title: Tax Gap: Administration Proposal to Require Information Reporting on Merchant Payment Card Reimbursements
Authors: James M. Bickley, Government and Finance Division 
Abstract: PAYGO) procedures have resulted in congressional and executive branch interest in raising additional revenue through proposals for improved tax compliance. The Bush Administration's FY2009 budget includes a proposal (the proposal) to require each payment card processor to inform the IRS on the net dollar amount paid to reimburse each merchant (i.e., seller) for his payment card receipts in a calendar year. Payment cards consist of both credit cards and debit cards. The card processor is responsible for delivering the payment card transaction to the appropriate card issuer in order that the customer is billed and the merchant receives funds for the purchase. The proposal would allow the IRS to compare the aggregate net payment card amounts reported by processors with the payment card amounts reported by merchants. The proposal would be effective for payment transactions made on or after January 1, 2010. The Bush Administration maintains that this third-party reporting would significantly increase compliance.
Pages: 10
Date: July 31, 2008