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Washington, D.C.— Today, House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY) penned a letter to FTC Commissioner Rohit Chopra calling on the agency to launch an investigation into withholdings taken by payment processor First Data from the company’s Puerto Rican clients.  

Puerto Rican businesses using First Data have reported that the companies’ merchant services processing system classified firms on the island as “foreign” for U.S. tax purposes and withheld 24 percent from all transactions. First Data’s actions run counter to Internal Revenue Service classifications and corresponding Treasury Department regulations that indicate Puerto Rican businesses should not be subject to such withholding. This burden has caused undue stress for many of Puerto Rico’s 40,000 plus small businesses and hampered them as they continue to recover from various natural disasters and battle the COVID-19 crisis.

“Given the Federal Trade Commission’s role as a regulator of payment processors, I urge you investigate First Data’s incorrect imposition of 24 percent backup withholding on Puerto Rico domiciled corporations using First Data’s payment processing system,” wrote Chairwoman Velázquez “For Puerto Rico’s numerous small businesses who use First Data’s payment processing systems, these types of errors are extremely harmful to their ability to conduct business and engage in commerce.”

The full letter is available here. 

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