Crapo Joins Effort to Block Unfair IRS Audits That Target Firearm Sales

Washington, D.C.--U.S. Senator Mike Crapo (R-Idaho) joined Senator John Thune (R-South Dakota) to introduce the Merchant Category Code (MCC) Neutrality Act, which would prohibit the Internal Revenue Service (IRS) from auditing taxpayers based primarily on the MCC used by their business.  The bill would also require the IRS to provide a report to Congress with an annual total of audits initiated for each MCC, and it would serve as an additional check against the Biden Administration’s $80 billion in new funding for the agency.

“My colleagues and I have been pushing back on misguided attempts to deny services to politically-disfavored industries,” said Crapo.  “This legislation furthers our efforts by preventing the newly-supersized IRS from using merchant or similar codes to target individuals or businesses for political reasons.”

“The IRS shouldn’t have free rein to use audits to inappropriately scrutinize or intimidate taxpayers due to the nature of their lawful business, including licensed firearm dealers,” said Thune.  “I have been sounding the alarm on the lack of transparency and accountability from the Biden administration’s IRS for months now, which is why I’m proud to introduce this legislation that would provide much-needed oversight against potential targeted audits.”

The legislation is co-sponsored by Marsha Blackburn (R-Tennessee), Bill Cassidy (R-Louisiana), Steve Daines (R-Montana), James Lankford (R-Oklahoma) and Thom Tillis (R-North Carolina).

The MCC Neutrality Act responds to the recent creation of an MCC for firearm and ammunition stores by the Geneva-based International Organization for Standardization that would specifically categorize transactions made at firearm and ammunition retailers.  MCCs enable payment processors to track purchases for functions like travel points and multipliers for dining or fuel without detailing the specific items purchased, but the creation of this new MCC was specifically sought with the intent to pressure lawful firearm retailers.

MCCs are submitted on IRS Form 1099-K, Payment Card, and Third-Party Network Transactions to verify transaction data, creating a potential avenue for the IRS to initiate targeted audits against certain MCCs.  While leading payment processors have suspended implementation of the new MCC for firearm and ammunition stores, this legislation would protect any merchant or business from targeted audits primarily based on MCC designation.

Additional background information on the bill can be found here

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