United States

Biden Wants ANY transfers over $600 to be Reported to the IRS

In a rulemaking proposal, the Department of Treasury supported by the Biden administration, is seeking to have any transfers over $600 be reported to the IRS. The purpose is meant to improve tax compliance. Now, the banks would be forced to report all transactional information as long as the transaction is more than $600; however, the bank would not be forced or required to identify the individuals even if the bank would still need to provide all of the transactional information.

The supporters of this rulemaking claim that the banks and financial services people use to transfer money already collect more than the information being requested by the Government; however, banks and those suspicious of the Government’s motives are adamantly opposed to the collection of this data.

This rulemaking comes as a result of a finding by the IRS that it was unable to account for $166 billion per year that are owed by businesses (not counting large corporations) and taxes actually paid.

It is interesting that the Government did not yet reveal how much discrepancy exists between the accounting of paid taxes for large corporations.

The treasury’s deputy assistant secretary for economic policy defended the small amount as making the tax system more equitable and efficient; however, those who are likely going to be targets of this transfer policy, specifically those who operate smaller businesses, will not see it this way.

This policy is projected to generate $460 billion over a decade, which would go to covering the $3.5 trillion reconciliation bill.

If approved, the rulemaking will become policy effective December 2022.

While the U.S. government claims that it is attempting to make the system more equitable, many see it as likely affecting those earning lower incomes disproportionately, as the amount that would trigger reporting to the IRS is at a threshold of $600.

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