The Biden administration wants to give the IRS more surveillance power, supposedly in the name of stopping tax evasion. But the plan is unclear and has met with major opposition.
First, the proposal is vague on what would actually be monitored. CBS News reported on Oct. 14 that bank accounts with $600 and individual $600 purchases could be monitored. There was an understandable backlash against the $600 threshold, and it was raised to $10,000.
But what exactly does the threshold mean?
Does it mean that any account with at least $10,000 will have all its deposits and withdrawals monitored? Does it mean that any individual withdrawal or deposit of at least $10,000 will be monitored? Or does it mean that you will be monitored if all your withdrawals and deposits add up to $10,000 in the course of a year?
There haven’t been any clear answers.
Republican Rep. Dan Meuser of Pennsylvania seems to think the threshold means that if all your transactions add up to $10,000 in one year, the IRS will spy on your finances. According to Meuser, if you spend an average of $28 per day, that means you — along with nearly every American — will be monitored.
The Democrats IRS Bank Surveillance Scheme is lunacy.
It is threatening the privacy of all Americans and will raise costs on our smaller financial institutions. pic.twitter.com/sBLHuu6k1K
— Congressman Dan Meuser (@RepMeuser) October 27, 2021
NPR tried to clear up the issue.
“Under the revised proposal, banks would have to report only on accounts with at least $10,000 in annual deposits or withdrawals, not counting deposits from paychecks or government benefits,” the outlet reported.
The Treasury Department did confirm that the threshold would not include paychecks and federal benefits.
“Under the current proposal, financial accounts with money flowing in and out that totals less than $10,000 annually are not subject to any additional reporting,” the department said in an Oct. 19 fact sheet.
“Further, when computing this threshold, the new, tailored proposal carves out wage and salary earners and federal program beneficiaries, such that only those accruing other forms of income in opaque ways are a part of the reporting regime.”
Regardless of what exactly the $10,000 threshold means, there are massive problems with this surveillance plan even in theory.
The Biden administration claims it will keep an eye on the wealthy and deter tax evasion and cheating.
“Imagine a taxpayer who reports $10,000 of income; but has $10 million of flows in and out of their bank account. Having this summary information will help flag for the IRS when high-income people under-report their income (and under-pay their tax obligations),” the Treasury Department explained.
Why this sudden concern for tax laws? Is it for the sake of morality?
Of course not. The Biden administration wants to make sure everyone is paying their taxes so that there will be enough money for the Democrats’ massive spending plan. President Joe Biden’s Build Back Better Act has a $3.5 trillion price tag, so he will need every tax dollar he can get.
Republicans are pushing hard against the surveillance proposal, arguing that it would be an invasion of privacy for millions of Americans.
The National Republican Congressional Committee released an ad saying that Democrats are “spending billions to hire an army of IRS agents to spy on your bank account.”
Banks are also opposed to the monitoring plan.
Apart from giving them extra work, it would make them have to report individuals to the IRS who are not cheating on their taxes. Essentially, bankers are screaming that this proposal does not actually target the rich or bad actors.
“While policymakers insist this provision is aimed at high income earners, it sweeps in almost any American with a bank account. This is bad public policy and should be rejected,” the American Bankers Association and the State Bankers Association wrote in a joint statement to the House last month.
Even after the threshold was raised from $600 to $10,000, bankers were not budging.
“This proposal still goes too far by forcing financial institutions to share with the IRS private financial data from millions of customers not suspected of cheating on their taxes,” Rob Nichols, ABA president and CEO, said.
Besides the proposal simply being unreasonable, it would likely put Americans at higher security risk. The IRS has a terrible track record of hacks and leaks.
“From January 2014 to May 2015, online hackers targeted the Internal Revenue Service’s Get Transcript application that enabled taxpayers to view, download, and order transcripts of their previous tax filings. The Internal Revenue Service’s statement on the breach admits to nearly 700,000 U.S. taxpayers’ accounts being compromised,” The Daily Signal reported.
This year, ProPublica managed to obtain 15 years’ worth of tax returns and documents from the IRS.
Bankers, lawmakers and every American who makes any money should be questioning the safety and integrity of this plan.
It is merely the Biden administration’s desperate and dangerous attempt to pay for its bloated agenda.
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