As previously reported, the Biden administration fully supports a plan proposed by Treasury Secretary Janet Yellen to keep tabs on certain transactions in your personal bank account. Not that you’re likely to do anything wrong, of course, but the data would be part of âroutine collection,â according to Yellen, and help the IRS fill in the gaps in the federal budget by looking for signs that you or someone you deal with is not paying the full amount of your taxes.[ectedofdoinganythingwrongofcoursebutthedatawouldbepartofâroutinecollectionâaccordingtoYellenandhelptheIRSfillgapsinthefederalbudgetbylookingforsignsthatyouorsomeoneyoutransactedwithisn’tpayingyourfullamountoftaxes[ectedofdoinganythingwrongofcoursebutthedatawouldbepartofâroutinecollectionâaccordingtoYellenandhelptheIRSfillgapsinthefederalbudgetbylookingforsignsthatyouorsomeoneyoutransactedwithisnâtpayingyourfullamountoftaxes
These federal budget deficits, which are widening day by day, would be filled by an estimate $ 7 trillion tax money that Uncle Sam thinks is being cheated and the Biden administration aims to put an end to it.
On Tuesday, Treasury Secretary Yellen offered a defense at the top of your lungs of the plan and says it’s perfectly reasonable to give the federal government any information it wants to keep confidentially in your personal bank account:
“Information gathering is routine,” Yellen assured CNBC’s Squawk Box co-host Andrew Ross Sorkin about new information gathering some Americans claim to be a privacy breach. .
Yellen insisted the collection will help close the tax gap.
“There is a huge tax gap in the United States estimated at $ 7 trillion over the next 10 years in terms of the deficit in tax collection compared to what we think is due,” she said. âAnd it’s not from people who don’t report salary income or dividends when there is good information. It comes from places where income information is opaque and can be hidden. ‘
She added, “It’s a simple way for the IRS to get a feel for where it might be – it’s just some information on people’s bank accounts.”
Until now, there has never been anything “routine” to dig into the personal finances of hundreds of millions of American households. Yes, people file taxes, which essentially gives the IRS an in-depth view of your financial life on the income side, but how you spend money isn’t part of the equation.
You must disclose your income since your employer must also disclose your income. However, you don’t have to disclose how much money you spend at Target each month, because other than sales tax, which is a local and state matter, that information is between you and Target, not the federal government. Also, why would the government want such information in general?
Yellen makes it sound like no big deal, but it’s big enough that banks and many government officials sound the alarm bells in opposition:
Banks, credit unions and other financial companies that would be required to report inflows and outflows of bank accounts to the IRS as part of the plan say the idea is overbroad to the IRS and would affect a wide range of taxpayers. Several small banks and credit unions have urged their customers to contact their members of Congress to oppose the idea.
“While we do not generally raise issues that arise in Washington with our clients, Congress is considering requiring financial institutions to report detailed information about clients’ bank accounts to the IRS,” First Citizens said. State Bank, based in Wisconsin, in a post on Facebook.
Banks have a bad reputation, and in most cases it is rightly deserved for nailing customers with high monthly fees and ruthless overdraft policies, among other indiscretions. Never heard of the 2008 real estate crash? The big banks don’t get a lot of sympathy from anyone. However, that does not mean that consumers want banks to renew their operations and offer their personal account details to the federal government when no crime has been suspected.
In this case, as is usually the norm, smaller entities will fight harder as local and regional banks will bear the burden of this regulation and will not have the same resources as mega-banks to comply with it. In other words, the big banks can absorb the burden and the loss of customers, small and medium-sized banks often cannot, so they fall back leaving customers adrift.
The details of Yellen’s proposal have far-reaching implications and largely relate to the digital economy and possibly cryptocurrency:
Put simply, this means that if the total funds entering and leaving a credit or debit account are at least $ 600, banks must report these numbers to the IRS. This includes paychecks or money transferred from apps like PayPal.
Apps like PayPal, Venmo, and Zelle are convenient ways to transfer money. As part of Biden’s plan to monitor your bank account, all of these transactions could come under scrutiny for tax purposes. If you accept an incoming Venmo payment of $ 600, the IRS would like to know where it came from and if you intend to claim it on your taxes, for example.
The consequences would be far-reaching, and hopefully banks and consumers can overcome this monumental excess of federal power and keep the Biden administration out of our bank accounts.