Selective escrow using electronic funds transfer

• US 20040193540A1
• Filed: 02/09/2004
• Published: 09/30/2004
• Est. Priority Date: 12/05/2001
• Status: Active Grant

• Current Assignee: Avalara Incorporated
• Original Assignee: DAVO Financial Services LLC
• Inventors: Joseph, David N., Brown, Owen H.
• Granted Patent: US 7,801,813 B2
• Time in Patent Office: Days
• US Class Current: 705/39
• CPC Class Codes: G06Q 20/04 Payment circuits
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/14 specially adapted for billing systems
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/123 Tax preparation or submission

Abstract

A method is employed to impound funds from merchant sales electronically in an escrow account for later use such as payment of associated sales taxes. An electronic funds processor (EFP) determines escrow information for credit/debit card charge payment requests made by the merchant via a credit/debit card terminal, forwards the requests to one or more credit/debit card issuers, extracts an escrow amount from payments made by the issuers to the merchant, and credits an escrow account of the merchant with the extracted amounts. An escrow agent periodically makes payments from the escrow account, and provides associated reporting to the merchant. The merchant is able to report cash sales via the credit/debit card terminal, and associated escrow amounts are extracted from credit/debit card payments or from another merchant account.

Claims

1. A method for impounding escrow funds by an electronic funds processor (EFP) from credit/debit card transactions of a merchant associated with a close-out period, the method comprising the steps of:

determining a first sales amount associated with one or more non-credit/debit card transactions of the merchant during the closeout period;

determining a second sales amount associated with one or more credit/debit card transactions of the merchant during the closeout period;

determining an escrow amount based on the first sales amount;

determining whether the second sales amount exceeds than the escrow amount; and

when the second sales amount exceeds the escrow amount,

crediting an escrow account with the escrow amount, and

crediting a merchant account with an amount equal to the difference between the second sales amount and the escrow amount.

2. The method of claim 1, wherein the one or more non-credit/debit card transactions are cash transactions.

3. The method of claim 1, wherein one or more non-credit/debit card transactions are each facilitated using a payment instrument selected from the group consisting of personal checks, money orders, bank checks, travelers checks, gift checks, gift certificates, and cash.

4. The method of claim 1, comprising the additional steps of:

determining a payable amount to be paid from the escrow account; and

debiting the payable amount from the escrow account.

5. A method for impounding escrow funds by an electronic funds processor (EFP) from credit/debit card transactions of a merchant associated with a close-out period, the method comprising the steps of:

determining a first sales amount associated with one or more taxable non-credit/debit card transactions of the merchant during the closeout period;

determining a second sales amount associated with one or more taxable credit/debit card transactions of the merchant during the closeout period;

determining an escrow amount based on the sum of the first and second sales amounts;

determining whether a third sales amount exceeds the escrow amount; and

when the third sales amount exceeds the escrow amount,

crediting an escrow account with the escrow amount, and

crediting a merchant account with an amount equal to the difference between the third sales amount and the escrow amount.

6. The method of claim 5, wherein the third sales amount is equal to the second sales amount.

7. The method of claim 5, wherein the third sales amount is equal to the sum of the second sales amount and a fourth sales amount associated with one or more non-taxable credit/debit card transactions of the merchant associated with the closeout period.

8. The method of claim 5, comprising the additional steps of:

determining a payable amount to be paid from the escrow account; and

debiting the payable amount from the escrow account.

9. The method of claim 8, wherein the payable amount is debited for payment to one or more of a local tax authority, a state tax authority, a federal tax authority, a judicial authority, a recipient of a legal judgment and a merchant.

10. The method of claim 5, wherein the escrow amount is determined as a predetermined percentage of one or more of the first and second sales amounts.

11. The method of claim 8, wherein the escrow amount is determined as a sum of one or more predetermined percentages of one or more of the first and second sales amounts.

12. The method of claim 10, wherein the predetermined percentage is determined from a merchant tax rate.

13. The method of claim 12, wherein the predetermined percentage is increased over the merchant tax rate in order to facilitate payment of back taxes.

14. The method of claim 10, wherein the predetermined percentage is determined as an estimate for generating escrow funds sufficient to pay a predetermined sum from the one or more of the first and second sales amounts over a predetermined number of sales periods.

15. A method for impounding escrow funds by an electronic funds processor (EFP) from sales transactions of a merchant associated with a close-out period, the method comprising the steps of:

determining a first sales amount associated with one or more sales transactions of the merchant during the closeout period;

determining a second sales amount associated with one or more credit/debit card transactions of the merchant during the closeout period;

determining an escrow amount based on the first sales amount;

determining whether the second sales amount exceeds the escrow amount; and

when the second sales amount exceeds the escrow amount,

crediting an escrow account with the escrow amount, and

crediting a merchant account with an amount equal to the difference between the second sales amount and the escrow amount.

16. A method for impounding escrow funds by an electronic funds processor (EFP) from sales transactions of a merchant associated with a close-out period, the method comprising the steps of:

determining a first sales amount associated with one or more sales transactions of the merchant during the closeout period;

determining a second sales amount associated with one or more credit/debit card transactions of the merchant during the closeout period;

determining a plurality of escrow amounts based on the first sales amount;

determining whether the second sales amount exceeds the sum of the plurality of escrow amounts; and

when the second sales amount exceeds the sum of the plurality of escrow amounts,

crediting one of a plurality of escrow accounts with each of the plurality of escrow amounts, and

crediting a merchant account with an amount equal to the difference between the second sales amount and the sum of the plurality of escrow amounts.