The Biden administration’s controversial proposal to grant the IRS the power to track bank accounts with more than $ 600 in annual transactions is under review, following the rejection of Republicans and bank lobbyists who have called this decision to invade privacy by the federal government.
A new proposal from the Democrats in the Senate and the White House would raise the IRS’s tracking threshold to $ 10,000 in annual transactions. Paycheck income with federal income withheld would not be subject to tracking and reporting standards. Unemployment and Social Security would also be exempt, according to a Treasury department report. Any bank account with more than $ 10,000 in non-payroll deposits and withdrawals would be reported to the IRS, but information about each individual transaction would remain confidential.
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ââ¦ Taxpayers who accumulate income in ways that are difficult to trace have much lower compliance rates because no third-party sources report the income to the tax authorities. Instead, these taxpayers take advantage of the fact that certain revenue streams are hidden from the IRS, without any information the IRS can use to detect non-compliance, âaccording to the report.
The changes would exempt millions of Americans from the reporting requirement and help the IRS target wealthier Americans, especially those who make money through investments, real estate, and others. transactions that are more difficult for the IRS to track.
Read more: IRS: the key to bank reporting data to fight tax evasion
Treasury Secretary Janet Yellen said in a declaration that the proposal aims to collect more taxes from people who operate the system because of a discrepancy in the way different types of income are reported to the IRS.
“â¦ Opaque revenue sources frequently avoid scrutiny, while federal salaries and benefits are generally subject to almost full compliance. This two-tiered tax system is unfair and deprives the country of resources to fund core priorities “Yellen said. She added that the new proposal reflects the “strong belief” of the Biden administration that it is essential to target high incomes who “do not pay the taxes they owe”.