My Merchant Account Blog - IRS Seeks Data from Payment Processor

IRS Seeks Data from Payment Processor

Thursday, April 16, 2009

U.S. District Judge Robert Blackburn granted a request from the Internal Revenue Service (IRS) on April 15, 2009. In this request, the IRS is seeking records as part of investigation of taxpayers whose businesses directly deposit income from credit, debit, and other payment cards into foreign accounts to avoid paying U.S. taxes. I have not had a chance to read the court documents, but right now it looks like the IRS is targeting merchants who have the payment processor deposit funds into an offshore account. This comes as the Swiss banking giant UBS agreed to turn over dozens of names suspected of concealing income from the IRS a couple of months ago.

I imagine though that other payment processors that support these types of accounts will be next, i.e. Paypal. You can always at least find a few messages a week in the message boards asking if Paypal (or other payment processors) report the earnings to the IRS. And most of these posters tend to have their website in their signature. Now to me, this just seems to invite the IRS to review your business and personal income tax reporting - but I could be wrong. Of course, if you are reporting everything to the IRS, you have nothing to worry about.

Usually we see a lot of merchants that are not based in the United States and they are wanting a merchant account from a U.S. transaction processor. Most transaction processors in the United States can only support U.S. based merchants due to their underwriters and policies.

So, if you are a United States merchant with a bank account not located in the United States - be warned, especially if you are using Cardservice International (dba First Data Independent Sales) - the IRS is looking for monies owed.