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Reply to "Biden Administration proposal of more bank reporting to IRS. "
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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The IRS can barely keep up now. How is it going to handle an enormous increase in the number of transactions to analyze? [/quote] It's not difficult at all to automate. Just total up the deposits and cross reference wth what's declared. They already do that with W's and 1099's. The IRS is capable of doing most of our returns for us right now. What they cant keep up with are the high value returns that claim a lot of expenses, deductions and depreciation that have to be double checked. [/quote] It's not hard but it is a massive storage and search problem. That's going to need equipment and people to maintain that equipment. [/quote] Data storage is super cheap nowadays. Bank accounts are already tied to our TIN/EIN. The system is already built. This would just be adding one more data point and the burden would fall on us as individuals to justify that income doesn't count, hence the complaints about burden.[/quote] What isn't cheap is the data security infrastructure. There have been IRS data breaches in the past and cybersecurity is a huge concern tha is expensive to address well.[/quote] Pretty much this. Data is cheap if you use the cloud. Do you want your banking records in the cloud, managed by the IRS? Remember how OPM failed to protect millions of employees records?[/quote] The IRS is not asking for a list of transactions. They are asking for annual account summaries. It's just two extra numbers on the 1099 forms they already produce.[/quote] The legislation is asking for transactions over $600. Not an account balance. An account balance would be worthless to determine cash flow unless you had multiple years.[/quote] Incorrect--first PP is right. They are asking for gross inflows and outflows on any account with an average balance of over $600.[/quote] And, this will affect nearly every bank account in the US. How is this helpful? .....More data does not mean better enforcement of laws. At some point, you become "data rich and information poor."[/quote] Deposits generally equal income. If declared gross income does not align with gross deposits then it is suspect.[/quote] As a bunch of people have pointed out, deposits do not generally equal income. There are many kinds of payments that are not taxable income and that wouldn't show up on a tax return, and these can be pretty substantial amounts. Gifts, loan proceeds, insurance payouts, tax free pensions, employee expense reimbursements, compensatory damages received from a lawsuit, most types of welfare, social security, refunds, sales of personal property, sale of a personal home where the amount of gain is under $500k ($250k single).[/quote] And those won’t be flagged. They are looking for patterns that indicate money laundering and/or tax fraud, not an occasional transaction in an otherwise normal bank account. [/quote] I understood this proposal to mean that those transactions all WOULD be flaggable, and the onus on the taxpayer to prove them to be innocent. Also, what about if I own multiple bank accounts and want to transfer money between them? Will I need to explain each and every one of those transfers to the IRS as well?[/quote]
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