ID S1066

Payment card networks must exclude state and local taxes and fees (calculated as a percentage and listed separately) from the amount charged as an interchange fee, including sales and use taxes, hotel and motel room taxes, fuels taxes, and cigarette and tobacco taxes.

Payment card networks must either deduct excluded tax amounts from interchange fee calculations at settlement or rebate a proportionate amount of the interchange fee.

Deductions or rebates must occur at settlement when merchants capture and transmit tax amounts at the time of sale, or payment card networks must accept proof of taxes collected upon submission of sales data and promptly credit merchant accounts.

Violation of these provisions subjects payment card networks to civil penalties of up to $1,000 per violation payable to the plaintiff, and requires refund of interchange fees to affected merchants or sellers.

The act takes effect on July 1, 2023, as an emergency measure.