Selective escrow using electronic funds transfer

• US 7,801,813 B2
• Filed: 02/09/2004
• Issued: 09/21/2010
• Est. Priority Date: 12/05/2001
• Status: Expired

• Current Assignee: Avalara Incorporated
• Original Assignee: DAVO Financial Services LLC
• Inventors: Joseph, David N., Brown, Owen H.
• Primary Examiner(s): Kalinowski; Alexander
• Assistant Examiner(s): Ebersman; Bruce I
• Application Number:
  US10/775,751
• Publication Number:
  US 20040193540A1
• Time in Patent Office: 2,416 Days
• Field of Search: 705/37, 705/36.R, 705/35, 705/38, 705/39
• 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 computer-implemented method for impounding escrow funds by an electronic funds processor (EFP) in a computer system from credit or debit card transactions of a merchant associated with a closeout period, the method comprising the steps of:

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

determining a second sales amount in the computer system EFP associated with one or more credit or non-debit card transactions of the merchant during the closeout period;

determining an escrow amount in the computer system EFP based on the first sales amount, wherein the escrow amount is determined as one of;

(1) a predetermined percentage of one or more of the first and second sales amounts, and

(2) a sum of a predetermined percentage of at least one of the first and second sales amounts,

and wherein said predetermined percentage comprises;

(1) a merchant tax rate, and

(2) 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;

determining in the computer system EFP whether the second sales amount exceeds the escrow amount;

crediting an escrow account with the escrow amount in the computer system EFP when the second sales amount exceeds the escrow amount;

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

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

debiting the payable amount from the escrow account,

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.

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

3. The method of claim 1, wherein one or more non-credit or non-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 first escrow account; and

debiting the payable amount from the first escrow account.

5. A computer-implemented method for impounding escrow funds by an electronic funds processor (EFP) in a computer system from credit or debit card transactions of a merchant associated with a closeout period, the method comprising the steps of:

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

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

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

determining an escrow amount in the computer system EFP based on the sum of the first and second sales amounts, wherein the escrow amount is determined as one of;

(1) a predetermined percentage of one or more of the first and second sales amounts, and

(2) a sum of a predetermined percentage of at least one of the first and second sales amounts,

and wherein said predetermined percentage comprises;

(1) a merchant tax rate, and

(2) 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;

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

crediting an escrow account with the escrow amount when the sum of the second and third sales amounts exceeds the escrow amount;

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

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

debiting the payable amount from the escrow account,

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.

6. The method of claim 5, wherein the predetermined percentage is increased over the merchant tax rate in order to facilitate payment of back taxes.

7. A computer-implemented method for impounding escrow funds by an electronic funds processor (EFP) in a computer system from sales transactions of a merchant associated with a closeout period, the method comprising the steps of:

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

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

determining an escrow amount in the computer system EFP based on the first sales amount, wherein the escrow amount is determined as one of;

(1) a predetermined percentage of one or more of the first and second sales amounts, and

(2) a sum of a predetermined percentage of at least one of the first and second sales amounts,

and wherein said predetermined percentage comprises;

(1) a merchant tax rate, and

(2) 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;

determining whether the second sales amount in the computer system EFP exceeds the escrow amount;

crediting an escrow account with the escrow amount when the second sales amount exceeds the escrow amount;

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

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

debiting the payable amount from the escrow account,

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.

8. A computer-implemented method for impounding escrow funds by an electronic funds processor (EFP) in a computer system from sales transactions of a merchant associated with a closeout period, the method comprising the steps of:

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

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

determining a plurality of escrow amounts based on the first sales amount, wherein each of the plurality of escrow amounts are determined as one of;

(1) a predetermined percentage of one or more of the first and second sales amounts, and

(2) a sum of a predetermined percentage of at least one of the first and second sales amounts,

and wherein said predetermined percentage comprises;

(1) a merchant tax rate, and

(2) 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;

determining in the computer system EFP whether the second sales amount exceeds the sum of the plurality of escrow amounts; and

crediting one of a plurality of escrow accounts with a corresponding one of the plurality of escrow amounts when the second sales amount exceeds the sum of the plurality of escrow amounts;

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;

determining a payable amount to be paid from one of the plurality of escrow accounts; and

debiting the payable amount from one of the plurality of escrow accounts,

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.