The Internal Revenue Service (IRS) has mandated the delivery of a printed receipt for electronic transactions and payment vouchers, aiming to provide consumers with proof of their purchases and combat tax evasion. However, this decision could render hundreds of thousands of payment machines obsolete, as many do not have the capability to print receipts.

Impact on Small Businesses

According to figures revealed, more than 600,000 payment machines could be affected by this new regulation. Many small and medium-sized enterprises (SMEs) and small shops rely on these machines due to their lower initial costs and long-term savings, as they do not require the purchase of paper rolls for printing receipts.

The Effect of the IRS Resolution: Over 600,000 Payment Machines Could Become Obsolete

On January 20, the IRS announced that starting May 1, all businesses must provide a physical receipt for every sale of goods or services. While electronic receipts can be issued and sent via methods like WhatsApp, these are only complementary and do not replace the obligation to print a physical receipt.

The IRS aims to ensure that consumers have evidence of their purchases and that the taxes paid on each purchase reach the government.

Criticism from the Payment Ecosystem

The resolution has faced significant criticism, particularly from the payment ecosystem. The new rule contradicts previous statements made by the IRS, as Transbank pointed out, “It contradicts its own criteria,” stating that in 2022 it was consulted in this regard and the service said that “certain requirements were met, the impression of voucher or ticket was a decision of trade.”

SumUp Chile, a major payment processor, warned that the resolution could hinder technological integration in SMEs, impacting their ability to stay competitive in a highly digitized environment. Sebastián Áviles, the commercial manager of SumUp Chile, stated that the resolution would be an obstacle to technological integration in SMEs and that it would have an impact “on the capacity of small businesses to stay competitive in a highly digitized environment.”

Klap, another payment processor, argued that the application of the measure must be clarified, given that digitalization “must continue to contribute” to the formalization and fulfillment of tax obligations.

Payment and Tuu Market also questioned the environmental impact of this measure, highlighting the sustainability concerns associated with printing physical receipts.

Reactions from Trade Unions

Trade unions have also expressed mixed reactions to the IRS resolution. José Pakomio, the president of the National Chamber of Commerce, praised the measure for discouraging VAT evasion but suggested that buyers should also be educated on demanding receipts.

Carlos Smith, an economist from the University of Development, pointed out a potential increase in costs for some companies, particularly microenterprises and small businesses.

Guilds like Fintechile, the Santiago Chamber of Commerce, and the Chilean Association of Gastronomy also emphasized the impacts and risks the resolution could generate for companies, particularly in the adoption of cash payments, which could affect traceability and tax control.

Máximo Picallo, the president of Achiga, questioned the necessity of printing receipts, considering that “the internal tax control capacity is infinitely greater than when the ballot was manual,” given the digitalization of processes.

Implications for U.S. Businesses

The IRS’s decision in Chile mirrors ongoing debates in the U.S. about the balance between digital transactions and physical receipts. In the U.S., the IRS has been pushing for more digital compliance, but the need for physical receipts remains a contentious issue. Small businesses, in particular, often rely on cost-effective payment solutions that may not comply with new regulations.

For example, many small retailers in the U.S. use mobile POS systems that do not have printing capabilities. If a similar mandate were imposed in the U.S., it could force these businesses to upgrade their systems, leading to significant financial strain.

Moreover, the environmental impact of printing physical receipts is a growing concern. In the U.S., there is a push towards sustainable practices, and mandating physical receipts could contradict these efforts. Companies like Apple and Amazon have already moved towards digital receipts, which are more environmentally friendly.

Counterarguments and Future Considerations

Critics of the IRS’s decision argue that it could stifle innovation and technological advancement in the payment ecosystem. The move towards digital transactions is seen as a step forward in terms of efficiency and sustainability. Mandating physical receipts could slow down this progress, especially for businesses that have already invested in digital solutions.

However, proponents of the regulation argue that physical receipts provide a tangible record of transactions, which can be crucial for tax compliance and consumer protection. They also point out that digital receipts can be easily manipulated or lost, making physical receipts a more reliable option.

As the debate continues, it is clear that any decision by the IRS will have far-reaching implications for both businesses and consumers. The key will be to find a balance that ensures tax compliance while also promoting technological innovation and sustainability.

Conclusion

The IRS’s decision to mandate physical receipts for electronic transactions has sparked a heated debate, with critics highlighting the potential for significant financial and technological hurdles for small businesses. As the U.S. continues to grapple with similar issues, the outcome of this debate in Chile could provide valuable insights for policymakers and businesses alike. The need for a balanced approach that promotes tax compliance, technological innovation, and sustainability will be crucial in shaping the future of digital transactions.