Biden IRS plan would track money flows from most bank accounts


On Tuesday, a reporter asked House Democratic Majority Leader Nancy Pelosi about the prospects for President Biden’s controversial proposal that would require banks to start reporting the activity of accounts with more than 600 to the IRS. $. It is part of the Democrats’ largest $ 3.5 trillion reconciliation plan. And the idea here is to give the IRS a more precise look at how people’s money is flowing. As a result, the assumption is that it will be more difficult to cheat if the IRS knows exactly what is in your bank account.

Critics decried the plan as a naked and somewhat frightening takeover, which the reporter presented to Pelosi. In light of those concerns, she asked if Democrats would actually stick to this proposal. “Yes, yes, yes, yes, yes,” Pelosi replied in a neutral tone. The President then continued her response by answering some of the questions raised by the journalist. “With all due respect, the plural of anecdotes is not a given.”

Biden’s controversial $ 600 IRS reporting plan

The New York Times’ The explanation of Biden’s plan exposes both what was proposed and why. This story also sheds light on why so many people hate this idea.

Let’s take a closer look. More specifically, in the first two paragraphs:

“When the Biden administration looked for ways to pay off the president’s sweeping social policy bill, it offered to raise revenues by cracking down on $ 7 trillion in unpaid taxes, mostly from wealthy Americans and corporations. . “

Sufficiently clear. This is the “why”. Give more funds to the IRS. That way it can put even more pressure on wealthy Americans. He says it, right there at the end – “Rich Americans and Corporations.” However, take a closer look at the sentence immediately following this paragraph:

To help find these funds, the administration wants banks to give the Internal Revenue Service new details about their customers and provide data for accounts with total annual deposits or withdrawals worth more than 600. $. “

Wait. How did we go from chasing rich Americans for more money to chasing anyone with at least $ 600 in the bank? In other words, in order to find wealthy Americans that the administration can look for more income, it will cast a net wide enough to encompass … the vast majority of Americans who have bank accounts!

“Calls” and “emails”

“We have heard a lot from our clients regarding their concerns about their privacy,” said Jill Castilla, CEO of Citizens Bank of Edmond outside of Oklahoma City. NYT.

“I got calls, emails, and then a lot of customers came in. “

Take a look at this Treasury Department fact sheet. He explains the intricacies of how it all would work. Biden’s proposal, according to the backgrounder, “leverages information financial institutions already know about account holders, simply requiring them to add information about aggregate outflows and aggregate entries to their regular annual reports. “.

Providing this information to the IRS, the statement continued, will help improve “audit selection.” So that the tax administration “can better target its enforcement activity on the most suspicious fraudsters, avoiding unnecessary (and costly) audits of ordinary taxpayers”.

The United States, of course, operates under a so-called pay-as-you-go tax system. So people pay a penalty for waiting until the end of the tax year to pay all at once. Under the new regime? The IRS could see that people have a certain degree of taxable income that goes through their financial accounts. Income on which they should pay taxes throughout the year. This is why this new authority has been described as akin to giving federal tax “cops” even more excuse to claim a metaphorical probable cause to financially “stop and frisk” someone.

A compromise in preparation?

There are actually two components of the Biden proposition to be aware of. According to the text, which you can read here, this proposal requires the collection of “gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account and transfers to and from another account with the same owner”. In addition, the text indicates that this proposal would apply “to all professional and personal accounts of financial institutions … with the exception of accounts below a de minimis gross cash flow threshold of $ 600 or at a fair market value of $ 600. $ ”.

In other words: what if more than $ 50 goes in and out of your account each month? ($ 50 x 12 months = $ 600). Then it concerns you. Same if you have $ 600 or more in your account at the end of the year (the second half of this statement above, “fair market value of $ 600”).

In order not to capture so many low-income Americans, Democrats are talking about setting the higher amount – at $ 10,000. But banks are already reporting cash deposits and withdrawals above that amount to the IRS. So Democrats seem to be saying that the minimum account balance threshold at the end of the year to trigger the IRS return would be $ 10,000.

Either way, whether Biden’s IRS reporting plan stays at $ 600 or higher, everything is still flowing for now. And extremely controversial, at least as it has been presented so far.


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