[snark]
Which will only be subsidized by the gov’t so that no one is “hurt”
[/snark]
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By the time they realize someone hasn’t been reporting their taxable income honestly, that person would have already died of old age.
Remember, it’s not just transactions of $600 or more. It’s transactions across a year, in and out, that total up to $600 (if I’m reading it correctly).
Unless you’ve got an account that you’ve set up and pretty much ignored, it’ll be subject.
Let’s get the facts right. The OP leads with:
A new proposal from the Biden Administration would force banks to turn over transactional data of most Americans for an IRS audit.
The actual proposal is this:
The annual return will report 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
The OP seems to say every transaction in the account. The proposal seems to say total inflow, total outflow, with additional totals for the three listed categories. I saw a bankers opinion piece in our local paper that claimed “all financial activity of all Americans” or some such. I don’t think that is accurate.
Income reporting is excellent on wages. because for wage earners employers send wage information to the IRS. Yep, the IRS has files that have the wages of all Americans.
But, nothing like that happens for self employment income. It’s basically “the honor system, assuming you’re willing to risk an audit, but, what’s the chance of an audit?”
My brother in law works for wages in the summer and does home improvement jobs in the winter. I expect that home improvement stuff is all word-of-mouth marketing and the revenue doesn’t get reported to the IRS.
I assume the IRS plan is to put the ratio of (bank deposits)/(reported 1040 income) into whatever algorithm they use for selecting returns for audit. And I’ll agree they need a trigger higher than $600.
See page 88 here: https://home.treasury.gov/system/files/131/General-Explanations-FY2022.pdf
Interesting that when I Googled this I got WSJ, Bloomberg, and a bunch of local news sources. I was on page three before I found a non-business national source (CNBC). Nothing from NYT, WaPO, NBC, etc. I don’t know if they aren’t reporting this or if other sources are getting the clicks on Google.
A lot of shit don’t get reported to the IRS. Rental income, cash transactions, venmo/apple pay/cash app transactions that have no way for the IRS to verify if it’s for business or private gift money exchanges.
This was the whole appeal of crypto. This will only push more people into crypto.
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I’d say “This is likely to make crypto more appealing to tax-evaders”
That is a related issue: https://www.cnbc.com/2021/05/20/us-treasury-calls-for-stricter-cryptocurrency-compliance-with-irs.html
Could well be. Working on VITA tax returns it’s kind of amazing the range of people we get and how they fill out their Schedule C’s.
On the one hand you have people who are terrified to deduct a modest amount of mileage and on the other hand we have people whose claimed expenses are absurd. Like, we can’t call them liars, but there’s smoke coming out of their pants.
Then there’s people where you ask them how much revenue their business had and it’s “oh, a couple hundred or so a month”.
Well back in college days a lot of my dual citizenship friends got tuition assistance because their parents’ reported income were 0, even though they’re actually loaded.
If “loaded” means living in the US with high incomes, then I would like to see the IRS find ways to find and tax that income.
For the uninititiated, what is the best way to buy cryptocurrency without reporting it to the IRS? I assume it involves showing up to a local hotel room with a briefcase full of cash, hoping my counterparty won’t rob or cheat me as he hands me a USB drive in exchange.
no, loaded as in living in a foreign country with high income, but reporting income as to the IRS 0.
Are they US citizens?
If yes, my understanding is that the IRS is much more likely to keep close tabs on them.
If no, why are they reporting income to the IRS in the first place?
Yes.
I don’t know the details. But there are a lot of shady things you can do with dual citizenship apparently. Hiding income is one of them.
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Could be… we don’t get a lot of dual citizens at VITA so my knowledge there is pretty thin.
I believe you. Certainly, that’s something the US gov’t should try to stop.
Honestly, “dual citizens can hide money from one of their countries” is pretty low on my list of things the US government should be worrying about.
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But according to Sleepy Joe, it won’t cost anything to hire the additional 87,000 IRS agents to audit this information. Even the Washington Post is skeptical and currently giving Biden’s claim about his plan 2 Pinocchios.
The claim isn’t that it’ll “cost nothing” so much as a claim that the increased tax revenue will offset the costs associated with the proposal.
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That doesn’t help the banks. And they will pass their costs to us in the form of higher fees.
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Exactly. I said pretty much the same thing.
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