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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][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] How wouldn't they be flagged? The IRS has no way to know what the cause of those deposits are until it comes to audit the taxpayer. For all they know, that $400k you got in from a home sale is actually a huge untaxed bonus from your employer. [/quote] Because they aren’t stupid. They know that people get an occasional bump in their accounts from sales of assets and transfers from other accounts. There are not going to be people investigating one-off transactions in a reasonable range. Nobody wants to examine your life. You are not as interesting as you think. There will be algorithms looking for accounts with excessive cash transactions that look like money laundering and fraud. This is a simple regulation that is needed to catch criminals. Unless you sell your house to a money laundering oligarch for much more than its worth and kick back some of the overpayment, then your home sale will not raise alarms. [/quote] If they are looking at accounts with a value at $600 or more they're looking at everything and everyone. The threshold is so low it's a joke. It practically sounds like they are going to hire IRS agents to look for pennies in your seat cushions. [/quote] THIS! I cannot believe pp is rationalizing this proposed regulation. Like I said before....... I'm just going to transfer money multiple times between family members just to "f" with the IRS if this goes into effect. I would encourage everyone else to do the same. [/quote]
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