May 7th, 2007
IRS plan for sites to report sales data troubles privacy advocates
President Bush is proposing that websites like eBay be required to collect personal data on their customers and share it with the IRS. The Center for Democracy and Technology is trying to rally opposition to the measure, ComputerWorld reports.
The move is part of an effort by the U.S. Treasury Department to track down unreported small business income generated by the sale of personal property on such sites. Under the proposal, online "brokers" would be required to file income statements for all customers who use their sites to conduct 100 or more separate transactions that generate $5,000 or more per year. Among the information the brokers would be required to collect would be customers' names, addresses and taxpayer identification numbers or Social Security numbers. The proposal would be effective for sales of property on or after Jan 1, 2008.
CDT is concerned that such a law would lead to a massive collection of Social Security numbers and other personal data, said Ari Schwartz, deputy director of the CDT. "The IRS is going after smaller businesses that cheat on their taxes," Schwartz said. In the process, though, millions of other Internet users who use such sites to sell personal property could also be affected.
Although the law would require websites to turn over data only on people who generate more than $5,000 from 100 or more transactions, sites are likely to respond by collecting data on all users because sites would be held liable for failure to provide the data.
"Sites that currently ask consumers for their [Social Security numbers] are very likely to be related to illegal 'phishing' scams. This proposal would make it harder to distinguish fraudulent sites," CDT said in its statement.
