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Merchant Card Information Reporting Will Become Law |
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The merchant card information reporting legislation that ETA has long opposed is about to become law as part of the American Housing Rescue and Foreclosure Prevention Act of 2008 (H.R.3221). The reporting requirement was included as a revenue offset in this high-profile legislation which includes assistance for financially-strapped homeowners and a potential bail-out for mortgage giants Fannie Mae and Freddie Mac. It was considered a must-pass bill by lawmakers from both political parties.
The bill cleared the U.S. House last week and the Senate passed it over the weekend. It is likely to be signed by the president very quickly and could become law as soon as August 1. The merchant reporting requirement takes effect December 31, 2010.
The major outlines of the requirement are clear: Acquirers must report to the IRS the aggregate dollar amounts of credit and debit card transactions for each merchant that has more than $20,000 in transactions and more than 200 transactions per year. Reporting will have to be done by taxpayer identification number (TIN). In certain cases, acquirers may also have to subject merchants to backup withholding. You can read a summary of the final legislation here.
[Update: President Bush signed the American Housing Rescue and Foreclosure Prevention Act late Tuesday afternoon, without a formal ceremony.]
Detailed rules for compliance will be developed by the Treasury Department during the drafting of implementation regulations. ETA will participate in the public comment process on the proposed requirements and will advocate for rules that avoid or minimize the backup withholding provisions of the new law, provide the maximum amount of time for the acquiring industry to meet its legal obligations, and mitigate the economic impact of the regulations.
ETA has actively opposed the merchant card information reporting scheme at every opportunity over the past few years. We joined with others in the industry, including the American Banking Association, the U.S. Chamber of Commerce, the National Association of Manufacturers and the Financial Services Roundtable, to inform members of Congress about the problems created by the requirement. ETA representatives met personally with members of Congress and Congressional staff to emphasize industry opposition to this measure and submitted testimony to the House Small Business Committee. ETA members also joined our efforts to defeat this legislation. More than 50 member companies signed an open letter to Congress and more than 1200 individuals used our web-based grassroots tools to contact their senators and representatives.
These activities yielded several victories. We were able to block attempts to include the reporting requirement in four other bills prior to the housing legislation. We persuaded Sen. Saxby Chambliss (R-GA) to cosponsor amendments to remove merchant card information reporting from the bill, or at least give the industry more time to comply. And we succeeded in convincing legislators to increase the reporting threshold from $10,000 to $20,000 per merchant.
While ETA, along with some of the largest trade associations in Washington, was unable to keep the reporting requirement out of the housing bill, our highly visible opposition has strengthened our position as an advocate for the acquiring industry and as a resource for members of Congress and their staffs. We believe this enhanced stature will give us the opportunity to influence the drafting of Treasury’s regulations for merchant card information reporting and give ETA members a greater voice in shaping future legislation.
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