Are there unintended consequences of the new IRS reporting requirements?
David Montague: For payment processors, this is not just a simple matter of developing an accounting and reporting system. Payment processors will need to integrate tax reporting into their customer facing applications; they will have to change the way they collect and authenticate account holder data; they will have to setup customer service support for tax related inquiries and they will likely have to change the fundamental way they look at account holders. Payment processors will also have to deal with the potential for brand damage from “guilt by association.” This association will come from account holders expressing their displeasure of the new requirements in the blogosphere and from the increased damage caused to victims of fraud. In terms of fraud, fraudsters that setup accounts using stolen identities will be causing 1099 income to be reported on the victims. In this case a 1099 would be generated and the consumer may not have any idea that it has occurred until they are con
