First telecoms collect, now credit card companies for government use

Because we can?

In an effort to track down unreported small business income, the U.S. Treasury is calling on Congress to create a sweeping new program that would require all credit card companies to report the income of all merchants to the Internal Revenue Service.

The proposal, raised in President Bush’s FY2009 budget, would require credit card companies to report the aggregate transactions of all of their merchants (that is, all the businesses that have merchant accounts with the card companies and to whom credit card payments are made). The reports to the IRS would have to be tied to the Taxpayer Identification Number (TIN) of the merchant. Many small businesses use their owners’ Social Security Numbers as their TIN. A similar program aimed at Internet “brokers,” including eBay and Amazon, which raised privacy concerns last year, seems to have been dropped from this year’s budget proposal.

The credit card reporting proposal is another example of efforts to require businesses to retain records of their customers for government purposes. Last year, the Treasury Department suggested data retention rules for Internet “brokers” such as Amazon and eBay, and the Justice Department has been calling for federal legislation that would require Internet service providers to retain information about their customers for months or even years at a time.

In May 2007, the Office of Management and Budget called on government agencies to report on and cut down on the use of Social Security Numbers and to look into using alternatives to the numbers for internal identification. The reason for this policy is that widespread collection and storage of SSNs and TINs creates a risk of identity theft and fraud.

The OMB action followed the April 2007 Justice Department and FTC plan to combat identity theft, which called on government agencies to reduce unnecessary use of SSNs. The logic of reducing use of SSN use is obvious. SSNs are an essential element of many types of ID theft and often one of the main targets of serious data breaches. Until we can limit the frequency of data breaches, we can at least limit the negative exposure caused by breaches by limiting the number of places we store SSNs.

The underlying finding of the DOJ-FTC report — that SSNs are a prime target for identity thieves and that their use should be limited — is difficult to reconcile with a plan that calls for massive new collection and storage of TINs.

Although the DOJ-FTC report implies that the IRS is an appropriate agency to collect TINs, forcing credit card companies to maintain the data on all merchants creates a major new risk for those taxpayers who have done nothing wrong.

Several things:
1. Income from small businesses is a great unknown to some and needs investigating, but the same are content with minimal enforcement of shelters and such of larger corporations and investors.
2. Since when has paying a fair share been important to this adminisration?
3. This appears to be another extension of total awareness programing mentality. ‘What’s in your wallet’ becomes the business of someone somewhere for possible criminal proceedings, not just marketing.
4. Will ‘cash’ become obsolete in the mainstream?