US government review of bank transactions

[mtdjed]

My wife just made over $600 in a garage sale. She will deposit this in a bank account, Supposedly the government , under a proposed new bill will require the bank to report this to the IRS. If that were to pass, what would happen to that info? Would we be required to justify the source of the deposit? Would we have to show the initial value of the items to determine if there was some income.

Obviously dumb questions, but only because of a dumb proposal. Why does this even become the subject included in a congressional bill? Who are the architects of this nonsense?

Maybe she should make two deposits on separate days. That should create a value to hire extra IRS personnel to investigate. Any bill that includes such nonsense should be declared invalid because of congressional ineptness.

In fairness, I have not read the bill and cannot say what would happen. Only responding to what has been reported.

[dewilson58]

Maybe she should make two deposits on separate days. .

If passed, won't help.

[frose]

I’m not allowed to say what should be done. It’s political

[Bay Kid]

Watch out, they would love to be like China.

[B-flat]

I’m not allowed to say what should be done. It’s political

:bigbow:

[Malsua]

My wife just made over $600 in a garage sale. She will deposit this in a bank account, Supposedly the government , under a proposed new bill will require the bank to report this to the IRS. If that were to pass, what would happen to that info? Would we be required to justify the source of the deposit? Would we have to show the initial value of the items to determine if there was some income.

Obviously dumb questions, but only because of a dumb proposal. Why does this even become the subject included in a congressional bill? Who are the architects of this nonsense?

Maybe she should make two deposits on separate days. That should create a value to hire extra IRS personnel to investigate. Any bill that includes such nonsense should be declared invalid because of congressional ineptness.

In fairness, I have not read the bill and cannot say what would happen. Only responding to what has been reported.


Right now the limit is 10k. If you deposit 7k and 4k to avoid reporting it, that is considered structuring and they will in fact notice this.

Therefore, yes, structuring deposits to avoid reporting requirements will get you the glare of the IRS and a host of new auditors, looking to make their bones, will love you.

Right now, they're talking about $600. This requirement will be completely waived in the future and all deposits will be tracked.

This is nothing more than the Feds trying to cash in on the underground economy and have some new spying tools. They say it will fill a 7 trillion dollar tax gap.

Of course, like all feds, they discount human behavior. If we make $1 per pack of cigarettes, and we get taxes on 1 billion packs, by raising the taxes to $2, we will make 2 billion!!!. Yeah, right up until you don't.

All this $600 thing will do is allow the feds to target anyone. It won't stop smugglers or people who don't want to be tracked. It'll snare grandma selling pies at the bake sale and for what?

How about they look into the Panama papers and start there? When they recover some of those billions, maybe then we can talk about Me-ma's knitting and pies. Until then they need to drop this idiocy.

[tvbound]

Efforts would be better spent, shining a light on the ultra-wealthy stashing money in offshore banks.

'Pandora Papers' detail the offshore banking network used by the ultra-wealthy : NPR (https://www.npr.org/2021/10/03/1042885263/pandora-papers-wealthy-offshore-banks-secret)

[blueash]

This is so typical on this website:

In fairness, I have not read the bill and cannot say what would happen.

Well perhaps just once, perhaps you could actually read the "bill" before you post such a totally wrong highly political comment. Obviously your posting was an attack on the administration.

By the way you might find it difficult to read the bill as there is NO BILL written. Use Google to educate yourself instead of just posting misinformation.

As to what you are supposed to do... if you made a profit on the sale of items you are already required by law to report that income. You know that don't you? The IRS is aware that there are lots of tax cheats out there. It is the job of the IRS to collect taxes due to the federal government. Their budget has been cut (https://www.cbpp.org/research/federal-tax/depletion-of-irs-enforcement-is-undermining-the-tax-code)at the same time as the anti-government fever has increased.

Banks already report your account information to the IRS. If you make a lousy 10 dollars in interest it gets reported. If you only make 9 dollars it does not, but guess what, you are still required to pay income tax on that unreported 9 dollars.

If you sell one share of Amazon via your Fidelity account, they are required to report that sale to the IRS including if they have the data your sell price and your cost basis. You pay mortgage interest to a bank.. it gets reported to the IRS. The idea that having financial institutions report transactions is a well established part of our law. There is a proposal to add two lines to the IRS requirement for banks on your account. How much money moved into your account and out of your account on a yearly basis, not on an individual transaction basis. While it is not clear to me how this will help reduce tax cheaters, I don't know how this data would get used to inform the IRS which tax payers need a closer look.

What is being proposed but NOT part of any legislation, is that a mechanism be found to collect taxes already due but not being paid rather have to close budget gaps by increasing taxes on those who don't cheat and defraud the government.

[GrumpyOldMan]

This is so typical on this website:



Well perhaps just once, perhaps you could actually read the "bill" before you post such a totally wrong highly political comment. Obviously your posting was an attack on the administration.

By the way you might find it difficult to read the bill as there is NO BILL written. Use Google to educate yourself instead of just posting misinformation.

As to what you are supposed to do... if you made a profit on the sale of items you are already required by law to report that income. You know that don't you? The IRS is aware that there are lots of tax cheats out there. It is the job of the IRS to collect taxes due to the federal government. Their budget has been cut (https://www.cbpp.org/research/federal-tax/depletion-of-irs-enforcement-is-undermining-the-tax-code)at the same time as the anti-government fever has increased.

Banks already report your account information to the IRS. If you make a lousy 10 dollars in interest it gets reported. If you only make 9 dollars it does not, but guess what, you are still required to pay income tax on that unreported 9 dollars.

If you sell one share of Amazon via your Fidelity account, they are required to report that sale to the IRS including if they have the data your sell price and your cost basis. You pay mortgage interest to a bank.. it gets reported to the IRS. The idea that having financial institutions report transactions is a well established part of our law. There is a proposal to add two lines to the IRS requirement for banks on your account. How much money moved into your account and out of your account on a yearly basis, not on an individual transaction basis. While it is not clear to me how this will help reduce tax cheaters, I don't know how this data would get used to inform the IRS which tax payers need a closer look.

What is being proposed but NOT part of any legislation, is that a mechanism be found to collect taxes already due but not being paid rather have to close budget gaps by increasing taxes on those who don't cheat and defraud the government.

Thank you for posting this, I won't have to.

The main points are - there is NO bill, it is a suggestion. Not reporting income is a federal offense. The proposal is NOT to monitor individual transactions, but aggregate over the year. So, any bank account would report the total amount deposited and withdrawn from the account in the course of a year. NOT when, why, or any other information. So, the IRS can cut down on the Billions that tax cheats are not paying.

If you are not a tax cheat it doesn't impact you at all.

[JMintzer]

Why even put it in the bank? Use it to go grocery shopping or to go out to dinner over the next few weeks/months...

[CoachKandSportsguy]

Why even put it in the bank? Use it to go grocery shopping or to go out to dinner over the next few weeks/months...

Correct answer for those who get under the table cash income. . always spend it as cash instead of putting it in the bank and then using a credit card. The vendors and stores will love you. . and boo hoo that you don't get your points, just save the earned money in the bank and there will be no trace of undeclared income, though doubtful many will have to realize this issue. The real issue is the transfer of crypto currency back into cash into a banking account to get the cash. . :boom:

Second, the analytical intent is a comparison of cash transfers versus earned income. There has been alot of unearned income during the pandemic with the stimmies check going to crypto trading and NFT sales. . (that's the biggie)

You have earned income of 100K and net cash withdrawals of $5K and net cash deposits of $1K, normal distribution of behavior.

You have earned income of 20K and net cash withdrawals of 0 and net cash deposits of 30K, you have undeclared earned income. .. . the IRS wants to have a meeting.


simple data mining

finance guy, and yes, i do some data mining at work

[Bill14564]

Thank you for posting this, I won't have to.

The main points are - there is NO bill, it is a suggestion. Not reporting income is a federal offense. The proposal is NOT to monitor individual transactions, but aggregate over the year. So, any bank account would report the total amount deposited and withdrawn from the account in the course of a year. NOT when, why, or any other information. So, the IRS can cut down on the Billions that tax cheats are not paying.

If you are not a tax cheat it doesn't impact you at all.

I never have liked that argument. If you are not a tax cheat then reporting more information to the IRS doesn't impact you at all sounds a lot like saying if you are not hiding something then letting the police search your body/car/house will not impact you at all.

Lowering the threshold to $600 means nearly everyone with a bank account will be swept up in the data collection. My fear is that whether or not you are a tax cheat will be determined only AFTER the investigation. I worry the burden of proof will be shifted from the Govt to the citizens. Rather than requiring the Govt to show evidence of a crime in order to acquire the banking documents to prove it, now the Govt will have the documents and could easily require honest individuals to show proof that their transactions are not evidence of a crime.

The Govt is trying to find needles in haystacks. Maybe they're right, maybe there are a lot of needles to be found, but anyone who has worked with dried hay will know that the hay itself is pointed and sharp and can be mistaken for a needle. It doesn't seem like too much of a stretch to imagine an overzealous investigator discovering a large number of needles that eventually turn out to be hay but only after seriously disrupting the lives of people who are not tax cheats at all.

(and that's without getting into the idea that the tax code has been made so complicated that it is already nearly impossible to not make an honest mistake that could be used to launch an investigation)

[Byte1]

Ok, if such a bill was to pass, there is simple work around. If you wish to spend $600, write two checks. If you wish to deposit $600, make two deposits. Simple solution. But, something like that is not only not going to happen, but it's not even feasible. Too much work involved to manage the idea.