I accept PayPal as a form of payment from a great many of my clients. I also use it for other things. And now the government wants to know exactly how much I am getting from PayPal. The housing relief bill that was just passed over the weekend contains requirement for credit card processors and electronic payment processors to report transactions. Ars Technica reports on concerns associated with this quiet addition to the housing relief bill:
Representatives for small business associations opposed to the
requirements observed, for instance, that many businesses took deposits
via credit card that did not constitute true income. Some also worried
that the IRS would use the data to target to audit businesses that
accepted an unusual number of electronic or credit card transfers for
Another issue is privacy. Such a measure would mean that payment processors would have to maintain business ID numbers. For some people, that number is a Social Security Number. You see how this could be a problem.
But Congress added it with no debate, and passed it as part of the package. The idea is to try and raise more revenue to offset some of the money flowing out due to the housing bailout. But will it really work?
In my case, more revenue is not likely. All the clients that hire me as an independent contractor report what they pay me anyway. But it means more work for my accountant, since he will probably have to reconcile the PayPal transactions with my 1099s and do any number of other things to make sure it all adds up. That, of course, means I will have to pay him more. So I suppose the government will get more in income tax from my accountant…
What do you think of adding this measure into the housing relief bill?