“Housing Bill” Affects E-commerce Merchants

Last week, President Bush signed the Housing and Economic Recovery Act of 2008 into law. Sure, another law will fix it. Hidden in the 700-page bill are a couple of totally unrelated provisions. One relates to hurricane recovery and gives tax breaks to a Canadian railcar manufacturer in Alabama. Of course, in true government style, this has nothing to do with housing relief but after all, someone had their hand out and got their hand-out.

There’s also some provisions in the bill for home buyer credit; provided that you’re a first-time home buyer between April 8, 2008, and July 1, 2009, and make under $150,000 ($75,000 if you’re single.) And there’s an additional $1,000 standard deduction against property taxes ($500 if you’re single.)

You wouldn’t think any of this has anything to do with E-commerce merchants that accept credit cards, but you’d be wrong. You’d be wrong because there’s also something in the law for us lucky merchants. Starting in 2011, banks or other companies that process credit cards must report the amount of the payments a merchant receives on card transactions to the IRS. The law will not apply to merchants doing less than 200 transactions totaling less than $20,000. We can all thank PayPal (thank you PayPal) that the exemption amount isn’t $600. Yep – they tried to make it $600, a whopping $50 per month, but PayPal successfully lobbied to raise it to the current level.

So, starting in 2011, even some smaller e-Bay sellers will have their income reported to the IRS.

Just thought you should know.

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