The Taxpayer argued that the interchange fees received from merchants were flow-through funds for issuer banks. In finding that the Taxpayer had failed to prove that the interchange fees qualified as flow-through funds, the judge stated that he was not persuaded that the Taxpayer had a fiduciary duty to distribute the interchange fees to the issuer banks. In addition, because the Taxpayer did not have contracts with the issuer banks, the Taxpayer could not prove that it was obligated by contract to distribute the interchange fees to issuer banks. Further, the judge noted that the Taxpayer recognized the interchange fees as revenue on its federal income tax returns.
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TECHNICAL INFORMATION CONTACTS:
Eric L. Stein
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