Systems and methods for determining taxes owed for financial transactions conducted over a network
Various embodiments of the invention provide a more secure financial transaction system for e-commerce sectors that (1) more securely processes payment transactions, (2) helps to protect merchants and banks against fraudulent transactions, money laundering, and underage gambling, and (3) helps to limit other abuses in areas of e-commerce that are perceived to pose special risks, such as Internet gaming, travel, and consumer purchasing of electronic goods. To accomplish the above goals, various embodiments of the financial transaction system (1) establish operating and transaction processing protocols for merchants, Internet payment service providers, acquiring banks, and card schemes and (2) provide automated systems for monitoring and securely processing payment and financial transactions.
1. A tax accounting system for financial transactions conducted with online merchants, the system comprising:
a memory configured for storing one or more types of tax and corresponding taxation rates for each of one or more tax jurisdictions; and
a processor configured for:
receiving a settlement request, the settlement request comprising settlement information associated with a plurality of financial transactions conducted between an online merchant and one or more customers, the settlement request requesting transfer of funds from one or more accounts associated with the one or more customers for payment to the online merchant in regard to the plurality of financial transactions;
submitting the settlement request to an acquiring bank;
receiving a payment report from the acquiring bank, the payment report comprising payment information associated with a payment to be received for each of the plurality of financial transactions associated with the settlement request;
in response to receiving the payment report:
reconciling each of the plurality of financial transactions by comparing the settlement information for a particular financial transaction with the payment information for the particular financial transaction; and
identifying each of the plurality of financial transactions that reconcile; and
for each identified financial transaction that reconciles:
identifying one or more tax jurisdictions associated with the financial transaction based on the information associated with the financial transaction;
in response to identifying the one or more tax jurisdictions associated with the financial transaction, querying the memory to determine whether one or more types of tax are associated with the one or more tax jurisdictions;
in response to determining that one or more types of tax are associated with the one or more tax jurisdictions, applying the corresponding taxation rates for each of the one or more types of tax to the information associated with the financial transaction to determine an amount of tax owed; and
in response to determining the amount of tax owed:
obtaining the funds being transferred from the acquiring bank for payment to the online merchant for the financial transaction;
deducting the amount of tax owed from the funds;
transferring the amount of tax owed to one or more relevant tax authorities; and
transferring remaining funds comprising the funds less the amount of tax owed to the online merchant.
2. The tax accounting system of claim 1 , wherein the processor is configured for sending a report to the merchant, the report comprising information for each financial transaction that does not reconcile.
3. The tax accounting system of claim 1 wherein the one or more tax jurisdictions are associated with one or more of a location of the online merchant, a location of the customer, or a location of a computing device used by the customer to conduct the financial transaction.
4. The tax accounting system of claim 1 wherein the processor is further configured for transferring the amount to the one or more relevant tax authorities via electronic funds transfer.
5. The tax accounting system of claim 1 wherein the processor is further configured for storing the amount of tax owed and the amount transferred to the one or more relevant tax authorities in the memory with the financial transaction information for a particular period of time.
6. The tax accounting system of claim 5 wherein the processor is further configured for generating an accounting report for each of the one or more relevant tax authorities, the accounting report comprising the amount of taxes owed to the relevant tax authority, the amount of tax transferred to the relevant tax authority, and at least a portion of the information associated with the financial transaction for which taxes were paid to the relevant tax authority.
7. A method for conducting financial transactions with online merchants, the method comprising the steps of:
receiving a settlement request, the settlement request comprising settlement information associated with a plurality of financial transactions conducted between an online merchant and one or more customers, the settlement request requesting transfer of funds from one or more accounts associated with the one or more customers for payment to the online merchant in regard to the plurality of financial transactions;
submitting the settlement request to an acquiring bank;
receiving a payment report from the acquiring bank, the payment report comprising payment information associated with a payment to be received for each of the plurality of financial transactions associated with the settlement request;
in response to receiving the payment report:
reconciling each of the plurality of financial transactions by at least one computer processor comparing the settlement information for a particular financial transaction with the payment information for the particular financial transaction; and
identifying each of the plurality of financial transactions that reconcile; and
for each identified financial transaction that reconciles:
identifying one or more tax jurisdictions associated with the financial transaction based on the information associated with the financial transaction;
in response to identifying the one or more tax jurisdictions associated with the financial transaction, querying memory to determine whether one or more types of tax are associated with the one or more tax jurisdictions;
in response to determining that one or more types of tax are associated with the one or more tax jurisdictions, applying the corresponding taxation rates for each of the one or more types of tax to the information associated with the financial transaction to determine an amount of tax owed; and
in response to determining the amount of tax owed:
obtaining the funds being transferred from the acquiring bank for payment to the online merchant for the financial transaction;
deducting the amount of tax owed from the funds;
transferring the amount of tax owed to one or more relevant tax authorities; and
transferring remaining funds comprising the funds less the amount of tax owed to the online merchant.
8. The method of claim 7 wherein the one or more tax jurisdictions are associated with one or more of a location of the online merchant, a location of the customer, or a location of a computing device used by the customer to conduct the financial transaction.
9. The method of claim 7 further comprising the step of transferring the amount to the one or more relevant tax authorities via electronic funds transfer.
10. The method of claim 7 further comprising the step of storing the amount of tax owed and the amount transferred to the one or more relevant tax authorities in the memory with the financial transaction information for a particular period of time.
11. The method of claim 10 further comprising the step of generating an accounting report for each of the one or more relevant tax authorities, the accounting report comprising the amount of taxes owed to the relevant tax authority, the amount of tax transferred to the relevant tax authority, and at least a portion of the information associated with the financial transaction for which taxes were paid to the relevant tax authority.