A proposed tax reform from the Biden administration would require financial institutions to send the Internal Revenue Service more information about many Americans’ bank accounts
the Biden administration proposal would require financial institutions to report more information on the total inflows and outflows of bank accounts.
In a letter to House Ways and Means Committee Chairman Richard Neal (D-Mass.), Yellen emphasized the importance of the measure.
“As you consider specific policy choices in designing an information reporting regime, it is important to ensure that the reporting regime is sufficiently comprehensive, so that tax evaders are not able to structure financial accounts to avoid it,” Yellen wrote. “Any suggestion that instead this reporting regime will be used to target enforcement efforts on ordinary Americans is wholly misguided.”
It’s not yet clear what the ultimate proposal may look like, but in written testimony from June 8, IRS Commissioner Charles P. Rettig described a reporting regimen that would require gross, annual inflows and outflows from “all business and personal accounts from financial institutions, includingbank, loan, and investment accounts” containing at least $600.
I would be very worried such intrusive financial surveillance would be used to selectively target enemies of the regime for IRS persecution. If they’ve got a good reason, they can get a warrant or the IRS equivalent to ask your financial institutions for records.
All you tax cheats out there (you people know who you are) had better watch out and be on your best behavior. Thank goodness these measures are aimed only at tax cheats!
This is the Republican response letter. Unfortunately pretty weak in my opinion. There should be a lot more outrage about loss of privacy.
Dear Speaker Pelosi, Chairman Neal, Secretary Yellen, and Commissioner Rettig:
We are concerned about a recent IRS data collection proposal to increase tax information reporting requirements on financial institutions, which we do not believe are necessary or helpful toward closing the “tax gap.”
The recent spending proposal to include new tax information reporting requirements for financial institutions would not only impose significant compliance costs on our banks, credit unions, and related financial institutions that have served as the backbone of this economy these past 18 months, but also infringe on the privacy of millions of Americans.
Specifically, such a proposal would require financial institutions and other financial services providers report information about the outflows and inflows on accounts over $600 to the IRS every year. However, financial institutions currently report a tremendous amount of data to the IRS, and no evidence has shown that the proposed requirements would substantially aid the IRS’s efforts to close the tax gap beyond the information already at the IRS’s disposal.
Not only would such an overly comprehensive IRS database require significant resources to build, maintain, and protect, but it would make the personal, financial data of millions of Americans vulnerable to attack. Considering the IRS experiences 1.4 billion cyberattacks annually and has experienced multiple data breaches, we should not give this agency additional sensitive data to manage.
Additionally, privacy is one of the primary reasons individuals choose not to open bank accounts. This overreaching proposal, if adopted, would further exacerbate banked/unbanked/underbanked divides.
We ask you to address our concerns as we work to craft a regulatory environment focused on protecting Americans and our financial system, not one focused on raising revenue at the expense of our taxpayers and financial institutions.
I’m all for catching tax evaders but I’m kinda curious how the extra reporting would help in doing so. Is it to catch cryptocurrency transactions that may go unreported? People transferring money from/to off-shore accounts? Catching other illegal activities/trafficking? There’s also no indication about either the reporting burden, the extra work for the IRS, and how much it’d help tax revenues.
To me, as is, the case is not strong enough - or has not even been made at all - to justify the need for such invasion of privacy. The “trust us” bit about this not being used for driving target enforcement efforts is also very reassuring. The word “instead” in Yellen’s sentence does nothing to rule out that the reporting regime would not IN ADDITION be used for target enforcement efforts…
You ignore the key part of that sentence - “Any suggestion that instead this reporting regime will be used to target enforcement efforts on ordinary Americans”.
They dont consider the people they would target to be ordinary Americans. The unvaccinated arent ordinary Americans, white men arent ordinary Americans, hell virtually anyone who lives entirely off their own income isnt an ordinary American any more. Of course the Biden-cheering, welfare-collecting, Democrat-voting “ordinary” Americans wouldnt not be targeted, just anyone who refuses to get in [the correct] line since they are inherently dangerous to the ordinary Americans.
The words you’re looking for are violent domestic extremists, since they disagree with our Dear Leader believing in stuff like that outdated constitution we’ve got, a traditional number of Supreme Court justices, criminals should go to jail, immigrants should follow a legal process if they want to come to the country, there are pretty much only two genders and the public picks what pronoun you get called rather than the mentally ill person, etc.
They’ve spend years explaining how anyone who doesnt agree with their agendas are terrible horrible no-good very bad people. Surely it’s not a leap to suspect that the scourge of society are not considered to be ordinary Americans?
Oh, and… https://www.yahoo.com/now/10-states-spend-most-least-090000541.html
I see Alaska on there, since they literally subsidize everyone living in their ridiculously harsh conditions. But the second Republican state was way down the list at #10. That’s not even close to “almost all the highest”.
Much like a lot of the so-called “misinformation” y’all love to denounce and ignore because it’s inconvenient for keeping people in line, simply declaring something is ignorant does not make it so.
That’s a fair point. In a financial context, maybe MSers are not ordinary Americans either. That loose definition does allow a lot of leeway to claim that those whom they target were indeed not sheeple but financial abusers of the system.
The mere fact that the new regime could allow more selective targeting is worrisome any way you look at it, but at this point also totally unjustified by the arguments - or lack thereof - provided or substantiated by facts highlighting a gap in current capabilities (aside from staffing possibly). If they hope to get this to stick, they either gotta justify it much better than by claiming they won’t abuse it. Or alternatively count on apathy or manufacture another crisis like the rest of the $3.5T bloat spending so people decide it’s not the hill to die on.
I see an obvious workaround. It doesn’t say at what point in time the $600 takes effect. If it is the first of the year, you could just withdraw most of your money on Dec 31st.
We’ll see the final reporting rule obviously but I don’t think it’s just balances > $600, it’s also inflow or outflows of $600 or more for each account. In which case, zeroing balances would be moot.
I’m reading it as $600 change in balances over the year but your guess is as good as mine as to what’s intended. If implemented, I’m sure there’d be more exact guidance for banks on how to decide what to report. Either way, it’s a very low bar for reporting activity on non-dormant accounts.
Hmm … we have to pass the bill to know what’s in it. If that came out of the previous administration, there would be wall to wall coverage across the main stream media spectrum. PMSNBC and CNN might go to a limited commercial format so that could repeat their complaints more frequently.
Actually you can check the proposal directly. I’m not sure how much of it will be part of the final bill but that’s what we have to go on so far.
But it’s fairly explicit on which accounts would be subject to the new reporting (p.88): “This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600.”
So it’d be both $600 balance OR $600 in gross flow. It does not state when the balance of $600 would count but it’d probably make sense to have it at a fixed date considering the second part is gross flow. Let’s assume they picked year end for balance threshold test.
If you moved money around intra-year, but returned balances to what they were at the date of last reporting, you could keep gross flow below the reporting threshold. You could also keep your US accounts with balances below $600 at the date of reporting but you’d need off-shore accounts to transfer the money to your US account just after the reporting date, and back to off-shore accounts just before the next reporting date. And you’d probably need to keep these transfers below $10k to avoid transaction scrutiny. Not trivial for most ordinary US citizens I’d imagine but not out of question for the well-connected tax cheats whom the proposal is trying to catch…
This may or may not be related to the change in rules but I got this from my bank today
Effective October 1, 2021, the United States Postal Service (USPS) has revised its service standards for certain First-Class Mail items, resulting in a delivery window of up to five days. Please note that this may delay your receipt of mail from us and our receipt of mail from you (including mailed payments). Please take this change into account when mailing items to us via USPS. For more information, visit usps.com.‡
