New IRS Proposal Could Have Negative Impact on E-Commerce

I just came across this story at WebProNews regarding a new IRS proposal that could have a negative impact on e-commerce. Essentially, The U.S. Treasury Department wants to crack down on Internet businesses like eBay and Amazon.com and require them to share their customer’s personal data with the Internal Revenue Service. What data specifically do they want? The obvious – names, addresses, etc. but then the not so obvious, social security numbers.

That’s right folks. If you complete more than 100 transactions on a specific e-commerce site totaling $5,000 or more per year, the IRS wants your social security number. This is so wrong on many fronts. I make more than 100 purchase a year, spending way more than $5,000 at my local grocery store and they don’t collect my SSN. However the IRS wants to force e-commerce to do so with online purchases?

The Center for Democracy and Technology is not happy with the proposal either. In fact they state, “(the proposal) calls for the collection, storage and transmission of large amounts of sensitive personal information at a time when Internet users are increasingly concerned about identity theft; and when public- and private-sector data breaches have become routine.” Ari Schwartz, deputy director of the CDT says that while the IRS only wants income statements from businesses that earn $5,000 from 100 transactions, most online sites will record personal information from everyone who uses their site.

The CDT also comments on what impact this could have on e-commerce sites – “Forcing businesses to collect SSNs could have a chilling effect on legitimate e-commerce if consumers balk at providing their SSNs for simple transactions — something most people are not accustomed to doing.”

Personally if I had to start providing my SSN when making an online purchase, I would no longer shop online but resort to the old fashion way, brick and mortar stores. WebProNews reports that no lawmakers have come out in support of the proposal yet, but that it is in the President’s 2008 budget and the fear is it could slip into a larger legislative package.

I am already very leery about who obtains my SSN. I fully understand that anyone I wish to obtain credit from has to have it but for example I have always have a problem with doctors and dentists who request it. A local bank whom I don’t even have an account with requested it one time after I had inquired about renting a safety deposit box. I was shocked and asked why they needed it of which they replied, “for marketing purposes.” Of course I told them that no way am I leaving them my SSN, especially seeing that I am not even their customer. Therefore I am certainly not going to give up my SSN to the likes of Amazon, eBay and other e-commerce stores simply because I buy from them. I have to assume that many others feel the same way in which case if the IRS’s proposal was to be put into law, it would have a terrible impact of businesses that strictly operate in the e-commerce environment.

David Wallace

David Wallace, co-founder and CEO of SearchRank, is a recognized expert in the industry of search and social media marketing. Since 1997, David has been involved in developing successful search engine and social media marketing campaigns for large and small businesses. Follow +David Wallace on Google + as well as Twitter.

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