A “dragnet for regular taxpayers” or a “target on the rich”? In the ongoing debate over tax hikes for the rich, the Biden administration wants banks to report aggregated 'inflows' and 'outflows' above $600 on individual and business accounts.
In the ongoing debate over tax hikes for the rich and multi-trillion dollar government spending on the social safety net, a much smaller dollar amount is catching a lot of attention.
Dealing with wealthy households that may have “opaque” or “hidden” income sources, Yellen on Tuesday told CNBC that “a simple way for the IRS to get a sense of where that might be is just a few pieces of information about individuals’ bank accounts, nothing at the transaction level that would violate privacy.”It’s not so simple, say critics, who range from the banking sector to privacy advocates.
The proposal’s fate is far from certain. If it becomes law, the threshold may reportedly rise to $10,000 of gross flows, according to the Wall Street Journal. When these “opaque” income sources are in the mix, the rate of noncompliance can reach an estimated 55%, she said. For taxes based on wage and salary income “compliance with income tax liabilities is nearly perfect ,” she wrote.
“We continue to believe this proposal jeopardizes the privacy and security of financial information for nearly every U.S. account holder,” said John Kinsella, vice president of tax policy at the trade association. “It would trigger an unprecedented amount of taxpayer information, most of which will be irrelevant to calculating taxable income, with significant cost and data security risk to taxpayers.
As for the worries on implementation, Huang called that “overblown,” noting financial institutions already have to supply documents like the 1099-INT for interest income.
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