The main thing I was wondering (it looks like this might not happen at this point) is…why $600.00? I get that its aggregate activity showing a difference between deposits and withdrawals, but that seems like a really low number. What’s the point of setting the bar so low, if not to look into the activity of average Americans? I could see this if the aggregate was, oh, maybe $100,000.00 aggregate activity, but $600??
I’m sure there is a reasonable explanation for this, but this seems like a low bar. And I’d guess that it’s going to put a real burden on the financial institutions. Personally, I"d be flagged pretty much multiple times a month, if I’m understanding this thing properly. My paycheck comes in, I pay the mortgage (flag), car (flag), and various other bills (flag). Since I mainly use a debit card for everything and pay using that account for everything, the aggregate would flag constantly, which would mean that just for me the bank might have to report the data multiple times a month, every month. Not difficult if I was the only one, but I won’t be. Scale that up to 100’s of millions of Americans and it would be a huge burden I would think.
So, what am I missing here? This can’t be the way it will work, as that seems really unwieldy, let alone how unpopular something like this would be to most people.
As you note, it’s not happening in quite that way. From the NYT (paywall warning), “Under the revised plan, which is backed by the Biden administration, banks would be required to provide data on accounts only with total annual deposits or withdrawals worth more than $10,000, rather than the $600 threshold that was initially proposed. The reporting requirement would not apply to payroll deposits for wage and salary earners or to beneficiaries of federal programs such as Social Security.”
Though I do not share your concern for the trouble this will cause the financial institutions.
BTW, as this CNN article, the banks are only required to submit annual reports, not daily, weekly or monthly.
I believe any payments of $600 for work need to documented on a 1099. So perhaps it was an idea to sqeeze more taxes out of workers who do work for cash on the side.
Ah, I hadn’t seen they have proposed a new limit. $10,000.00 seems a bit more reasonable. I was just skimming through the news app I use (Ground News) and just saw the headline
Depends on the financial institution. I’m pretty sure Chase or Wells Fargo won’t have an issue, but I’m guessing it would be harder for the smaller institutions to comply and stay competitive. But maybe not, it was just something I was thinking of when I saw this originally, as compliance with something like this can be costly from an IT perspective, as there is a ton of stuff you need to do to make it happen and stay in compliance with PII and other stuff.
I don’t think that would be the target for this, at least that’s not what Biden et al are saying is the target. That’s why it was so puzzling to me…I mean, the ‘super rich’ are certainly making $600.00 aggregate activity from their accounts…times a few orders of magnitude. Even the not-so-rich and famous such as I make bigger deposits/withdrawals than that multiple times a month. Now, $10k…that’s something I don’t do very often, though it probably happens a few times a year.
Right, same as the earlier proposed $600 in aggregate activity. So, yeah, I’d still get flagged a lot, but not as often as at the $600 level. But $10k is probably going to be logistically easier for small to medium banks to do and stay in compliance with, and it seems a more reasonable place to set the bar for reporting. Even more reasonable, if they are going after the ‘super rich’ seems like $100k, as that would take out most people and focus on what they say is their target group.
But, and correct me if I’m wrong here, every time my (just using me as an example) aggregate activity crosses the $10k threshold there would be a report sent, or at least the account would be flagged for review annually. So, if my aggregate activity in, oh, say 2 months is $10k, that would be a flag. Then 2 months later, another flag. Etc. By the end of the year, I’d have been flagged 6 times.
Personally, I don’t have an issue with this. I didn’t really care that much about the $600.00 level either, as I couldn’t see how that would hurt me, personally…it just seemed awfully low so I figured I’d ask 'dopers what I was missing.
Depends on what they are actually trying to accomplish with this. If they are trying to find a ton of untaxed income then having a report that flags every time aggregate transactions cross a threshold would be useful in at least telling them an audit might be in order. The same goes for the $600 original mark, but I think there you’d be hitting a huge group of people, as opposed to looking at a much smaller potential data set.
Well, I’m not proposing anything, just saying that this would make more sense, to me at least…someone who doesn’t even pretend to be a financial expert or understand the intricacies of all of this. It’s why I asked a question in this thread, instead of making assertions.
I am still concerned with the banks, at least the smaller ones to be in compliance with this. I think setting the bar at $600 would be more onerous than what I was saying along with setting the bar at $10k, but either way, it’s going to be more burden on the banks…and that means it will be more burden on the smaller banks than the bigger ones.
As I quoted from the NYT, “the reporting requirement would not apply to payroll deposits for wage and salary earners or to beneficiaries of federal programs such as Social Security.”
My bank statements just list the transactions. They don’t distinguish where the transactions came from. If the IRS were inquiring, I am not confident that my bank would choose to err on the side of my privacy.
My online banking website indicates that certain deposits were direct deposit payroll checks. They say “ACH Electronic Credit [employer name] PR PAYMENT”.
Isn’t that what’s make compliance easy? Banks are in the business of keeping track of money. They already give data to the feds yearly. They’d be giving some more, things they’re already tracking during the course of business.
