A new proposal that received backlash for privacy concerns
Recent claims about the IRS monitoring bank accounts over $600 have some people questioning their financial privacy, but now there are talks of revisions to the proposal.
RAPID CITY, S.D. (KOTA) - The Department of Treasury and Senate Democrats proposed a law requiring U.S. banks to give the IRS extra information on accounts with more than $600 in withdrawals or deposits within a year.
But, the proposal received an immense amount of backlash from Americans and the banking industry due to privacy concerns.
However, the additional information wouldn’t give the IRS access to individual debits or credits.
“What they’re suggesting be reported is the total amount of cash in and the total amount of cash out, not specific transactions,” said Rick Kahler, founder of Kahler Financial Group.
This proposal came as a means for the Biden administration crackdown on tax fraud.
It’s designed to more closely watch how people’s deposits match their withdrawal, helping the IRS flag under-reported income and identify tax evaders.
But, taxes are more complicated than a steady flow of cash in and out.
“So of that 100 that came in, let’s just say that 90,000 of it was a gift or an inheritance, that doesn’t at all mean that there’s anything untoward, so I think it’s going to create a bureaucratic nightmare,” said Kahler.
After concerned responses to the initial draft, Tuesday, Senate Democrats proposed a revision to the law, now suggesting Financial institutions report accounts with more than $10,000 in annual withdrawals or deposits with some exceptions. For example, money earned from a job, wouldn’t be counted toward the $10,000 minimum.
Banks & Credit Unions across the country already report the earned interest in every account to the IRS. With the Treasury’s proposal, financial institutions would also report total deposits and withdrawals once a year.
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