Democrats try to pass IRS threshold of $ 10,000 to just go after 1% – Reason.com

As telegraphed last week, Democrats on Capitol Hill, facing heavy criticism, today raised the proposed new IRS reporting threshold on bank accounts from $ 600 in combined annual transactions to $ 10,000, according to the Washington post.

Negotiators on the controversial proposal, which is embedded in the multibillion-dollar social spending bill that Democrats will seek to pass with a party-line majority, also say wage revenues will be exempt, although the How financial institutions (which are the entities responsible for notifying the IRS) make this determination unclear, as does the entire application of the U.S. Family Plan’s tax compliance program. “The exact accounts that should be subject to the new rules have been the subject of fierce debate,” he added. To post Remarks. Federal benefits such as Social Security checks would also be exempt.

President Joe Biden, Treasury Secretary Janet Yellen, Speaker of the House Nancy Pelosi (D-Calif.), Senator Elizabeth Warren (D-Mass.) To postthe description of the first paragraph) a “proposal to crack down on wealthy tax evaders”.

Sen. Ron Wyden (D-Oregon), in a statement prepared for today’s threshold change, claimed that “the main reason Republicans have clung to this issue as the one they all lie about days is because they know their tax agenda is a political loser, “and that” the American people overwhelmingly want to ensure that mega-corporations and billionaires pay their fair share, so Republicans have largely abandoned their tired arguments “.

But the people most likely to see their newly calculated transactions for the IRS each year are not millionaires who scatter their holdings over 100 different $ 10,000 accounts, but rather freelancers, small business owners, immigrants and anyone who has paid or offered money in the bank for more than four months. minimum wage work in New York. If I paid my 13 year old daughter $ 100 a week to babysit my 6 year old daughter and she would turn around and spend all that money on Brandy Melville, her bank might be forced to report her deposit / withdrawal amounts to the end of the year.

I say “may” because, again, the details of this matter are being discussed behind closed doors.

The Biden administration expressed exasperation at the pushback: “It’s about making sure the richest 1% can’t escape $ 160 billion a year in taxes,” the door complained. -speaking of the Treasury Department, Alexandra LaManna. New York Times last week, but a look at Treasury’s wishlist makes it clear that this measure is designed to boost compliance among the bottom 99%:

Require full information report on the inflows and outflows of financial accounts will increase the visibility of gross receipts and deductible expenses to the IRS. Increased visibility of business revenues will improve the effectiveness of IRS enforcement actions and encourage voluntary compliance.

This proposal would create a comprehensive financial account reporting regime. Financial institutions would report financial account data in an information return. The annual return will show 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. This requirement would apply to all business and personal accounts of financial institutions, including bank, loan and investment accounts, except for accounts with a de minimis gross cash flow threshold less than $ 600 or a fair market value of $ 600.

Other accounts with similar characteristics to financial institution accounts will be covered by this information reporting regime. In particular, payment settlement entities would collect tax identification numbers (TINs) and file a revised Form 1099-K extended to all payee accounts (subject to the same de minimis threshold), reporting not only gross receipts but also gross purchases, cash, as well as payments to and from foreign accounts, and incoming and outgoing transfers.

Similar reporting requirements would apply to exchanges and custodians of crypto assets. Separately, reporting requirements would apply in cases where taxpayers buy crypto assets from one broker, then transfer the crypto assets to another broker, and businesses that receive crypto assets as part of transactions from a fair trade. market value over $ 10,000 should report these transactions. .

Emphasize mine. Raise your hand if you qualify for the net.

As the the Wall Street newspaper The Editorial Board is rightly concerned that banks (as well as all other financial institutions) “would bear the cost of reporting more than 124 million US accounts each, which may require new software and staff. additional. user fees. ” When the IRS mandated foreign financial institutions to spit out information about their U.S. customers overseas ten years ago, millions of Americans were kicked out of their accounts.

The IRS itself acknowledges that “the United States enjoys a relatively high and stable rate of voluntary tax compliance.” But in order to maintain the laughable fiction that “the cost of the Build Back Better program is $ 0,” our already intrusive, anti-Fourth Amendment federal access to personal financial affairs must be dramatically expanded in one – their words! – “Comprehensive financial reporting regime for accounts.” One that will undoubtedly have less than absolute data security.

Those who value their financial privacy and are not wealthy enough to afford the kinds of professional tax reduction services that this enforcement measure will fail to curb, are urged to keep their transactions in cash. If the Biden administration gets what it wants, it may not have a choice.

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