Summary: A small gem was inserted into the $3.5 trillion reconciliation budget that will affect every financial account held by an individual, a business, and a corporation! This gem is located within the May 2021 Department of Treasury’s General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals, Section headed, Improve Tax Administration, subsection headed “Introduce Comprehensive Financial Account Reporting to Improve Tax Compliance, starting at page 88. The proposal is for banks, financial institutions, and similarly situated entities to report to the IRS each and every transaction you make that exceeds a $600 threshold. The current threshold is $10,000.
Please go to these General Explanations and/or read further below.
Details: The actual proposal reads, as follows:
This proposal would create a comprehensive financial account information reporting regime. Financial institutions would report data on financial accounts in an information return. The annual return will report 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 from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600.
Other accounts with characteristics similar to financial institution accounts will be covered under this information reporting regime. In particular, payment settlement entities would collect Taxpayer Identification Numbers (TINs) and file a revised Form 1099-K expanded to all payee accounts (subject to the same de minimis threshold), reporting not only gross receipts but also gross purchases, physical cash, as well as payments to and from foreign accounts, and transfer inflows and outflows.
Similar reporting requirements would apply to crypto asset exchanges and custodians.
Separately, reporting requirements would apply in cases in which taxpayers buy crypto assets from one broker and then transfer the crypto assets to another broker, and businesses that receive crypto assets in transactions with a fair market value of more than $10,000 would have to report such transactions.
The Secretary would be given broad authority to issue regulations necessary to implement this proposal. The proposal would be effective for tax years beginning after December 31, 2022.”
Back in May, U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) filed an amendment to prohibit this unconscionable invasion of privacy.
“This time-draining burden disregards banking privacy in order to squeeze more resources out of responsible Americans and entrepreneurs. It subjects law-abiding Americans to more intense targeting from the IRS and additional data collection, a concern that was recently amplified by a leak of private taxpayer information out of the IRS. I have long been critical of big data collection activities, and oppose turning banks and brokers into government tax collectors. My amendment prevents the undue monitoring and reporting of sensitive American taxpayer information to the IRS by financial institutions about deposits and withdrawals made by any individual or business.”
The amendment was, of course, defeated by the Democrats..
Moreover, the Independent Community Bankers of America, the Credit Union National Association, the American Bankers Association, and the National Association of Federal Credit Unions expressed strong objections with the new reporting proposal, citing concerns with the increased burden on financial institutions; privacy concerns for customers; and other unintended consequences for personal and business account holders across the spectrum. Nevertheless, some $80 billion is proposed in the budget to support the IRS in this new reporting endeavor.
The IRS probably has already started drafting new regulations to implement this requirement rather than waiting for the House and Senate to agree on the final version of the budget reconciliation bill that they will surely pass and that President Biden will surely sign later this year!
The progressives are in charge! They want to control everything we know, what we think, what we can say, what we do, and how we do it! I will be damned if I let them win!
Resistance is never futile! We must resist with all our might!
I hope this is of value!