That is quite literally what it does!
Or is it your contention, when the IRS is faced with a succession of transactions that go over the limit, the account owner can say, “Sorry, boys, it’s all legitimate,” and the IRS will take his word for it, cordially shake his hand, and forget all about it???
As a non-resident American, I have this impression that my bank will be reporting my U.S. account, only because I transfer money from foreign accounts to the U.S. so I can pay U.S. bills.
I have no problem with the IRS wanting to find tax evaders. I am not happy with IRS reporting requirements which costs me more time and money to prove that I’m not hiding anything.
How do you imagine it will cost you any time or money? You aren’t the bank.
The IRS isn’t going to be auditing everyone that they collect data on, only accounts that match patterns of suspicious activity. It is actually believed there will be less audits in general under the new system, so any compliance burden will be lessened, and also more likely to be borne by people who are either actively committing the crime of not paying tax, or who are not properly managing their business records–which is something they can correct over time.
FWIW if you’re a small business the compliance costs for complying with an IRS audit should not be significant. Larger businesses have accounting staff whose jobs it is to prepare records and handle tax issues, so the incremental cost of being audited by the IRS will not be significant.
The cost of defending yourself if the audit goes into a criminal investigation will be high, but that basically almost never happens to anyone who wasn’t actively committing tax crimes to begin with.
No it is quite literally not what it does. The IRS already has the power to get your transaction data from the bank, this doesn’t change that power at all. And once again, it is not the administration that does this, but the IRS. So, on no point are you correct on your assertion.
See, this comment is why I would say you have an extremely poor understanding here. Your bank would not be reporting a succession of transactions, it compiles one report at the end of the year. Just like it does with your interest now. Just as your employer does when it sends in payroll information.
If the IRS sees that your deposits are significantly larger than your declared income, then they would ask you where that money came from. If you can show that it is legitimate and that taxes were appropriately applied to it, then you have no problem. If it is not, then they are just enforcing the laws that you were trying to break.
The only people who will be “harmed” by this are tax cheats.
Your post is nothing but fear mongering in the service of tax cheats.
I know a guy who is a little slow. He does apartment clean outs for a living, getting minimum wage plus anything he wants to keep. He uses his own truck/gas.
Around five years ago he told me he got a big raise. He was very excited about it. Turns out his “raise” was just his employer considering him an independent contractor (he is not) and no longer taking out taxes.
I tried explaining this, but no matter how I tried he refused to listen. Surprisingly he hasn’t been caught yet, but I’m thinking that will change soon.
Actually my CPA has an audit guarantee, and will represent me for free if I am audited. If things get to where tax lawyers are involved, then I may have to pay something out of pocket, but that would only really occur if I lied to my CPA about where my income is coming from. (or got him to lie, I suppose)
It’s better sooner than later. If the first year he gets a letter from the IRS saying that he needs to pay taxes on his contractor income, then he can resolve that then. If he goes 10 years, then that’s going to be a bigger problem.
In any case, the IRS will likely be more interested in going after his employer if he is inappropriately classified.
The IRS is actually quite reasonable if you have messed up on your taxes. They give you ample opportunities to correct errors on both your and their part. And once you’ve settled on the tax that is owed, they work with you on what payment plans you can find affordable.
My brother had a landscaping company (well, a truck, chipper, and some chainsaws, if you can call that a company), and didn’t believe in paying taxes. He went decades without paying a penny in tax. He ended up going to jail for a little bit for his fraudulent activity. This will make it a bit easier for the IRS to catch tax cheats like my brother, and I have no problem with that.
If Trump wins again, this is among the least of my concerns. Why do you treat Trump winning again like a veiled threat?
That’s not the proposal. Imagine these were phone records. “Phone records” could mean anything from complete recordings of every phone call you make or it could mean a record like “Does he have a phone?” This proposal is somewhere in the middle. It’s more like, “how long does he spend on the phone each year?” and “how much of that is calls to or from overseas?” The proposal doesn’t ask for any information about who you transact with.
Good. I would like them to enforce the laws that are already on the books. Where do I usually hear that refrain?
I’m simply not worried about this. If you think the IRS’s biggest concern will be a dude who works at Pizza Hut who sells his car and uses the proceeds to buy another car you aren’t really paying attention to the problem they are trying to solve. The sources of information you are relying on are trying to sell you a bill of goods: that this proposal is targeted at the small, honest taxpayer. The tax cheats who influence the media coverage really want you to believe that and it seems to be working.
If you read the proposal, you would see that it does include a cryptocurrency provision but I recognize that one page might be too big a commitment to learning when you can instead spend time spouting off nonsense.
I believe that they can obtain them as part of an investigation but I don’t think they begin an investigation until they have reason to believe there is a tax deficiency (or occasionally, they audit at random). The new proposal is something different because the IRS will be able to use the limited reports of almost all bank accounts to make better guesses about when there are deficiencies. I support this but I won’t pretend it’s not a change from the status quo.
In one sense it is significant because some people fear it but in other ways, it is so insignificant it does not motivate tax compliance. You note the $600 billion tax gap.
No, it’s not just about cash deposits and the reporting threshold might be much lower than $10,000. The IRS will be looking for people with large net cash inflows that are not explained by their income tax. The IRS will, over time, develop risk metrics based on the data they have to determine who are worthwhile audit candidates. It will include things like peoples’ professions, reported income, and now, this limited information about their banking activity. I’m not saying that a dude who sells a car will never get an audit but the IRS isn’t going to routinely audit dudes who sell cars.
It isn’t a tax hike for anyone. It is intended to make people pay the taxes they already owe. The burden will fall on many “small” business owners who don’t bother to pay their taxes. It should.
Why do you assume that? I assume that many work under false social security numbers, pay their taxes assiduously, and don’t receive the benefits, like Social Security, that other taxpayers receive. Do you have reliable data about your assumption?
The IRS would get summary data, not a running list of transactions. Look back up at my post about the contents of the report this proposal calls for. The IRS will get lots of reports on lots of people, legitimate and illegitimate. They will need to determine, based on this data and other data, which accountholders are paying their taxes and which may need to be investigated further.
Banks would report lots of accounts. It will not look suspicious to the IRS that a person who (1) lives overseas, and (2) has always reported having overseas accounts will have overseas accounts. I can’t say how their risk weighting will work but this doesn’t seem like the kind of thing that would look suspicious.
Even I have a hard time believing they will do fewer audits. Hopefully, they will do both more and better targeted audits that collect more money.
Believe it or not, that is the projection–that there would be fewer audits because they wouldn’t have to open audits on more limited information which sometimes results in audits on taxpayers who owe no tax.
That would be even better. I hope it works out that way. Fewer better audits is the type of government service we should be striving for.
The IRS can already snoop through your bank transactions. It takes a letter, every agent can issue a summons.
However, this new bill does not do that.
Actually,no the $80million just puts the IRS back where it was before the GOP gutted it, more or less. That was done so their rich buddies can cheat.