A dozen or so years ago, Congress began systematically cutting the budget of the Internal Revenue Service, the federal government agency that collects taxes.
As the owner of a modest amount of stock in a Mississippi-based bank, I am aware of the role the IRS already plays in getting data from banks. The IRS database already has your filed tax returns, your Form W-2 information on income from your employment, and Form 1099 information from your interest or dividend earning income. If you are of age, the IRS also has database information about your retirement income from the Social Security Administration.
The IRS has information on your Individual Retirement Accounts (IRA) and Form 1099-K details if you receive enough money through PayPal or other digital transactions. If the IRS wants more information, their revenue agents can issue a summons directly to the banks.
Now, in the wake of the realization that the IRS has been crippled to the point that the agency cannot effectively and fully enforce the nation’s tax laws, President Joe Biden’s administration and his congressional allies are advocating requiring the nation’s banks to give the IRS even more data about money moving in or out of people’s bank accounts.
The short-term goal is gaining more money to finance the multi-trillion-dollar government spending proposals backed by Biden – but his allies see it as a path to finance the even larger spending plans advocated by the far-left wing of the Democratic Party.
The $3.5 trillion “Build Back Better” plan touted by Biden already seeks higher taxes on corporations and the wealthy to finance it. At the same time, the Congressional Budget Office has already reported that the IRS would require $20 billion over the next decade to close the tax gap between taxes owed and taxes paid.
So, to make up for a prior decade of budget cuts and staff reductions at the IRS, the Biden administration is advocating a policy that will force the private sector financial industry – not just Wall Street banks but Main Street banks as well – to ramp up their staff and data resources to essentially function as data miners for the IRS. And that’s after the extraordinary amount of data that banks already provide under current rules.
Remember, the IRS can already issue summons to banks for a wide array of data, but that comes after IRS employees examine a taxpayer’s return. This new law seeks to have private sector bank employees perform that function off the federal payroll.
Another concern is the security of the newly mined bank account inflow and outflow information regarding private accounts. The IRS has been the target of hackers who successfully breached an estimated 700,000 Social Security numbers in 2015, with the breach coming to light in 2016 – and later at a higher number than the agency initially reported.
Mississippi State Treasurer David McRae joined 19 of his colleagues around the country in sending a letter protesting the proposed policy to President Biden and Treasury Secretary Janet Yellen, in which the state chief financial officers said:
“The IRS is a constant target of cybercriminals and in recent years has suffered significant breaches. This reporting requirement will consistently put a large amount of sensitive financial data in transit to the IRS and at constant risk of cyber-attack.
“The IRS does not currently have the capability to effectively utilize or protect this data. If passed, this will be one of the largest and most continuous data mining exercises against Americans in our history and will put a constant strain on customer privacy, data security and overall safety of the banking system.”
Another viable concern is the impact on the nation’s banking system that drives doubt between banks and their customers were expressed by McRae and his colleagues in their message to the President.
“Requiring financial institutions to police accounts and constantly report to the government may create a lack of trust, causing many to close financial accounts, increasing the number of unbanked Americans.”
There has to be a wiser, fairer fix to the realities of years of IRS budget cuts than forcing private banks to become part-time IRS agents. Congress should own their decade of IRS budget cuts and craft better solutions.
Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com.
32 comments:
"Let's go Brandon"...#FJB
Are we going to pretend it wasn’t the Republicans who have been sabotaging the irs for years to protect their wealthy, tax-dodging base?
Raising taxes on corporations accomplishes one thing for sure. That is it moves jobs out of the USA. Four years ago, tax cuts brought jobs back to the USA. How short sighted can people be?
As if they aren't already doing that ! If you folks think big brother doesn't already know what you spend and when you spend it......hell, your smart TV watches you scratch your sac while watching the local news ! Your lap top records your online buying.....and on and on. There ain't no turning back without an upheaval that resides in our nightmares. See you Saturday at the rallies downtown !!
The $600 reporting amount will drive the little man to close his bank account and work via cash and barter.
#FJB. The wealthy are the Democrats, if you do any type of elementary research you’ll see the richest people, unions, and corporations are all Dems or contribute to that party.
As a CPA if this is enacted I can only imagine the amount of computer generated letters clients will be getting about information on their tax returns not matching the inflows their bank accounts are showing. The real headache will be that it will take the IRS 8 months to read your response letter and in the meantime the client will be getting levy notices. Already happening now since they are so understaffed. The computer system sends out the intent to levy before they even read the taxpayer's response, and you can forget about getting someone on the phone.
8:35 Are you kidding! Pelosi, Benny Thompson and Biden included are just a few of the Democrats that have stuffed their pockets. Biden has the opportunity to STOP this from happening just like the 13 Soldiers killed leaving Blood onHis hands.
There’s an interesting article on Reuters about the Republicans attempts to increase its funding. I wonder why they don’t want the wealthy to it their taxes?
https://www.reuters.com/world/us/us-infrastructure-deal-teeters-after-republicans-reject-irs-funds-2021-07-20/
Another article about the Republican scheme to help tax dodgers: https://slate.com/business/2021/07/republicans-taxes-irs-bipartisan-infrastructure.html
This is probably why BTC is up to $55,000 per coin today.
I am so glad that I converted a large portion of my wealth into the Etherium years ago, before the IRS got involved.
I yearn for the day when there are no boomers left and we can finally live entirely cashless and decentralized.
And we will finally free ourselves from enslavement by the rootless cosmopolitan international bankers who are trying their hardest to shut down the blockchain.
Hell they can't collect on the people that owe taxes and people openly know it. Look at the Rev Al Sharpton. Owes north of $4 or 5 million. Willie Nelson settled his $32mil tax lien for $9mil. If @#FJB was really worried about the rich paying their fair share like he crows, why not go after the big players and leave us $600 transaction people alone?
News flash, he isn't worried about the rich and it's not about the common man. He and his billionaire buddies Pelosi, Schumer, and Bernie Sanders who have made millions, even billions, being a politician are supporting him. Let that sink in.
It’s time you bums who are tax cheats pay, if there is nothing unusual, you have nothing to worry about. I don’t like paying taxes but I like driving on decent interstates, the safety net for children, the elderly and people less fortunate than me. I don’t evade my taxes and I am sure pay just as much if not more than most. Call me a liberal if you want but I vote straight Republican.
Being discussed on national radio now.
Jan. 6 commission chairman [Bennie Thompson] once sympathized with black secessionist group that killed cops
2022 elections can't come soon enough.
@8:35a- The IRS is a monster and it needs to be slayed.
On the flip side, I’ve seen more middle income and people of color being audited in the past few months than I’ve ever seen before. Democrats always buy into to that 1%/white man-cheating hype proving they are absolutely clueless about what their fearless leaders are actually doing.
Do you want to know which sector of the population “cheats” on taxes the most? It’s the everyday working folks. The ones without tax attorneys and knowledgeable CPAs. The ones who don’t realize when their pop-up tax preparer has made huge errors. The ones who don’t truly understand what is taxable, and therefore, don’t show proper income records. Hence, this $600 big brother threshold set under the watchful eye of your Democratic leaders.
Wake up, dude!!
11.53 : Damn sure did. And still does.
Somebody please tell Lloyd Austin to shut up.
I yearn for the day when there are no boomers left and we can finally live entirely cashless and decentralized.
Decentralized? ROFLMAO You are CLUELESS as to what is happening.
If the government didn’t throw our drug head relatives a bone we are really going to have to pay for it. Let the government do it, there is only so many of us actually working. As long as we keep getting the same deal we get now &2.88 on the $1 in taxes paid. Let it keep coming , I don’t understand why anyone would complain. We aren’t paying for it.
@12:25 - what’s your source for who the biggest tax cheats are? It’s not based on fact so just curious where you heard that nonsense.
12:25 is correct, there is quite a bit of tax evasion by people who take cash as payments for work. Think Barbers, Beauticians, Painters and other Craftsmen. They shoot themselves in the foot by not paying SS taxes. They steal from each one of us twice, first by not paying their fair share of federal taxes. Then when they get 65, they get the same Medicare we get. With payment apps they are doing it in broad daylight .
9:03, Ramey's has aluminum foil on sale this week 2 for 1.....buy plenty so you can double layer!!!!!
The police state is on the horizon. The FBI just raided the home of the head of the NYPD's sergeant's union (an NYPD sergeant), who has been very outspoken against the socialist mayor DeBlasio.
Now the FBI is the SS for the mayor of NYC.
All this is to get the cash only workers to pay taxes. How else can you explain the average person who gets a W-2 as it is already reported. Like I have said, we all need to go to a flat 10-15% sales tax on everything and that will get the drug dealers, cash only workers whenever they buy something.
Now the problem is getting that money collected each time from a business. Florida does it.
While Joe and Jill evaded about $500K in tax from their book and speaking deals and Hunter is under investigation by the U.S. Attorney for evading tax on his millions of foreign source income. I've been a practicing CPA for a long time and they'd have thrown me and my clients under the jail if that type of thing was going on with any of them. Good for thee by not for me. #FJB!!!
@2:03 is that yet another argument to privatize SS and let us fund our own retirement?
@1:54p- Years and years of experience is my source.
You obviously have no clue what is considered earned income per the IRS or you would not have made your comment.
10% flat tax on everything. The end. And no dollar is taxed more than once. If you calculate how much that dollar in your pocket has paid in taxes, you'll throw up in your mouth. We can mint a trillion dollar coin in 5 minutes so what's the deal?
We need some serious punishments for convicted tax dodgers. It’s the same as stealing and should be treated just as any other burglary/embezzlement. If the wealthy were held accountable, this wouldn’t be an issue.
It’s funny how everyone here says it’s the dems who don’t want the IRS funded and yet the Republicans actively campaign on the promise to defund the IRS. It’s almost like the right is operating in a fantasy land.
https://www.businessinsider.com/letter-conservatives-irs-funding-taxes-mitch-mcconnell-bipartisan-infrastructure-biden-2021-7
https://www.politico.com/news/2021/07/18/portman-irs-enforcement-infrastructure-package-499988
7:48 -- correct. Biden wanted to hire more IRS agents. Republicans said no.
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