Us Congress Senate Bill SB898

Us Congress 2023-2024 Regular Session

• Introduced: 3/21/23
• Refer: 3/21/23

Caption

Merchant Category Code Neutrality Act

Impact

The proposed changes in SB898 could have substantial implications for how businesses are audited by the Internal Revenue Service (IRS). By preventing auditors from using Merchant Category Codes as a primary basis for audits, the bill intends to limit potential biases and provide greater fairness in the treatment of different business types. This could especially impact smaller businesses that may have been subjected to disproportionate scrutiny despite having similar tax obligations to larger counterparts.

Summary

SB898, known as the Merchant Category Code Neutrality Act, seeks to amend the Internal Revenue Code of 1986. The primary objective of the bill is to prohibit audits based primarily on Merchant Category Codes, which are classification codes assigned to businesses by payment card organizations that denote the type of goods or services they provide. By implementing this prohibition, the bill aims to alleviate potential unfair targeting of businesses based on their categories, thereby fostering a more equitable auditing process within the IRS.

Contention

Debate surrounding SB898 may center on the balance between necessary IRS oversight and business protection. Supporters of the bill argue that such a prohibition is essential to ensure fair treatment and to protect small businesses from undue audit risks associated with their categorization. Conversely, opponents could raise concerns about the implications for tax compliance and the potential for increased tax evasion if certain businesses are deemed less likely to be audited. The effectiveness of the IRS in managing compliance without relying on Merchant Category Codes could become a contentious point in discussions as the bill progresses.