The real political goal here is to create a mechanism for triggering audits—probably through an algorithm—so the IRS can rifle through all of a taxpayer’s business and other financial records.
Banks will also be in the awkward position of helping the government police their customers. Recall how liberals howled about the National Security Agency antiterror program that required telecom companies to share phone metadata with the feds. Now Democrats want financial institutions to help the tax collector track your cash flow. Vows of privacy at the IRS aren’t worth much after the recent leaks of taxpayer data to ProPublica.
The IRS already has enough data to go after the wealthy and genuine tax cheats. It wants to look at everyone’s bank account so its agents have another excuse to audit and squeeze more money from non-wealthy Americans.
Manchin is apparently strongly against this IRS snooping provision, so there’s hope it gets cut. Lots more detail on tax policy, etc, below.
Manchin said he told Biden in the Sunday meeting that any such reporting requirement — even restricted only to accounts of $10,000 or more — would be a red line.
“I said, ‘Do you understand how messed up that is? To think that Uncle Sam’s going to be watching?'” he told Rubenstein. “And so [Biden] says, ‘I think Joe’s right on that.’ So I think that was going to be gone.”
What’s worse to me is this ridiculous wealth tax on billionaires proposal. So let me get this straight - they want to tax unrealized gains on stock etc., which is absurd on its face and probably unconstitutional.
So does that mean when we have a bear market, they’ll get a big refund check? Because that’s the only way this stupid plan would have a minimal chance of making it.
It’s been a long time since either party was fiscally conservative, and we have the trillions in debt to prove it.
They’d get a tax deduction valid against future years unrealized gains as far as I’ve read.
There’s no question it’s a dragnet for unreported or misreported income And more specifically from small business, rental, and farm incomes since those are - from the IRS own report - the ones showing the least reporting and the largest tax gap.
It’s clear to me that they intend to use this as makeshift reporting for income streams that are not susceptible to accurate reporting like wages or investments held at financial institutions. Maybe they’re hoping that it’ll nudge some people into better compliance but if not, I’m sure it’ll be used to target audits.
The Democratic snoops haven’t given up yet
Maybe the only way to get a good enough CBO score (by projecting lower IRS tax gap) to placate the few Dems reluctant to sign off on a spending binge that doesn’t look like it’ll pay for itself.
Flipping this issue around, what would be an effective but less-intrusive way for the IRS to lower the tax gap from unreported/misreported incomes due to revenue streams with low to no documentation?
Automated data analytics choosing which returns with Schedule Cs to examine/audit based on which businesses/incomes they’ve caught in the past few years hiding things. I bet congress has no idea how well the IRS is doing on that front right now. If I had to guess, they are pretty poor at it. There’s no point in bringing in a ton of bank data (99.9% of which is just noise) if the IRS isn’t any good at analyzing the reams and reams of data they already have.
For instance - the new 1099-K rules just went into effect. The IRS now has TONS more data on people getting paid with credit cards (with a bunch of noise from people that got $600 selling crap on ebay). I’ll bet my paycheck they are still in the process of developing the data analytics to compare those credit card receipts to the revenue amounts on businesses’ returns to see where the biggest underreporting offenders may be. That will probably take years to refine. No point in sending them 20x more data (with 100x more noise) from every bank in the country when they can barely analyze the stuff they have now.
So fixing staff shortages at IRS would be sufficient assuming the current data provided to it and the development of analytics?
If the IRS does not need more staffing to insure higher compliance, and if this automated data analytics could cut down tax evasion with current data available, why was it not implemented before?
[quote=“Shandril, post:72, topic:4309”]
If the IRS does not need more staffing to insure higher compliance,
They do need more staffing, especially people fluent in data analytics - a career field still in its infancy. Do a search on indeed for the salary of a data analytics programmer and you’ll see why they don’t have many.
Because it’s complicated work that is difficult to implement and it takes time. In terms of the IRS, data analytics as we know it right now is brand new.
The Republicans tried to stop the bank transaction surveillance but the Democrats voted unanimously for the surveillance
Im not sure “banks can’t ever be required to report anything that wasn’t already required on Oct 1” was the best approach.
It is rather funny to think about how all this extra IRS funding is going to be burnt on building a system and storage for this massive amount of required reporting. And then they won’t have any money left to actually do anything with the data
True but they will print more money to fund those efforts.
They will always find the money to come after non-millionaires (whatever they define that as of today). They don’t have the horsepower to go after large or multinational corporations, nor do they wish to tangle with Billy Gates (even if he were conservative) or the Koch brothers, etc. Guys and gals (and one day, its) working 16 hour days to grow their company is the IRS target of choice. They can’t afford high-dollar accountants and tax lawyers. The IRS means to keep it that way, by hook or crook.
Meaning it’s fine to not pay what you rightfully owe in taxes because you cannot pay a competent accountant as long as you work 16 hours per day?
I know I’ll get called out for blaming the victim here but as taxpayer it’s your responsibility to make sure you pay what you owe, not underestimate, hope you stay under the radar, and later claim ignorance. Many years ago when DH assigned some patents, we totally knew we were in over our heads for the tax reporting. So we hired an accountant to do it for us so that we’d be squeaky clean when/if we got audited (which happened 2 years later and IRS came out empty fortunately for us). It was a bit costly but we learned from the process how to report it on schedule E appropriately. Would I have preferred a simpler filing process? Totally but that doesn’t excuse tax evasion.
I think he was more referring to not being able to afford a robust defense when accused of underpaying. For every one tax cheat that gets fingered, there will be ten more people being abused and bled dry for no tangible reason. They don’t get a chance to win, because it’s far cheaper to just concede. While for the rich, with much larger amounts on the line, continue to pay for a defense that can resolve the situation favorably.
Huh? Where the HE double hockey sticks did that come from. At least you put a question mark at the end of the statement, I guess to mean it’s a question.?!
If it is a question, the answer is an empatic no.
Would you mind explaining how you arrived at that conclusion?
I’ll try again, and use bullet point form to hopefully be more clear.
- The IRS prefers to target less powerful, capable, smart, wealthy, connected people and companies.
- The IRS does not have the backbone, bandwidth, or brains to tangle with the accountants/lawyers of multinationals or the uber-wealthy.
- Small and medium sized (depending on definition) businesses, and their owners, who do not have the time, staff tax lawyers, or tax accounting departments to help them structure their company and deals are much easier targets for the IRS.
- By continually targeting small/medium companies, the IRS intends to make sure they don’t become large companies who can afford staff tax lawyers and/or tax departments to outsmart or overwork the IRS.
To be even more clear, target and targeting, as used above means to investigate, audit, and/or harass.
Finally, to prevent another erroneous accusation, “uber”, as used above, is not a Nazi reference, symbol, name, sign, picture, pictograph, or anything else.
That’s the notion I disagree with fundamentally. The no tangible reason is highly debatable. One tangible reason seems to me that money gets recovered. If income was deliberately under-reported, I don’t think the IRS is to blame. If a taxpayer did not pay a competent accountant who can prove that they are in compliance, should the IRS be held accountable for lack of tax preparation effort/expense?
Or should nobody ever get audited and those with less well documented incomes enjoy a free pass to pay whatever amount of tax they feel like paying? Or should audits be completely non-targeted in which case the IRS will spend most of their time auditing people with only W2s and 1099-INT taking the standard deduction?
What’s the better way - beside audits being targeted at the less well documented returns and larger dollar amount returns - to make sure that everybody pays what they owe as defined by the tax code in a cost-efficient fashion? To me, it’s a bit easy to complain about the targeting until you consider the alternatives.