An anonymous reader tipped us off to a proposed new U.S. policy which would require banks, credit unions and other financial companies to submit reports on most of their accounts to the tax-collectors at America’s Internal Revenue Service (IRS). The reports “would break down the numbers to include physical-cash transactions per account, any transactions with a foreign account and transactions between accounts held by the same owner,” according to the Arizona Republic newspaper. “The IRS wouldn’t receive details on individual transactions but, rather, gross yearly totals.”
America’s treasury secretary reiterated that what’s being proposed “is not reporting of individual transactions or anything of the like. And it would be a simple thing for banks and other payment providers to provide along with the other information they’re already providing.”
But the Arizona Republic notes the proposal is drawing some concerns — partly because it’s been suggested it would cover any account with more than $600:
Critics say this would burden financial institutions with new requirements and expose consumers and businesses to privacy incursions and possible data breaches. Supporters contend bank customers would face no new obligations while giving the IRS more information to pursue tax cheats, primarily among the wealthy. They hope to close a tax gap estimated at around $600 billion annually…
The $600 figure isn’t set in stone. Some media reports have indicated it could be increased to, say, $10,000 — the level at which banks report transactions in an effort to combat money laundering. A Treasury summary of the plan indicated there would be no further recordkeeping or reporting requirements for individuals or businesses and that taxpayers wouldn’t face any burdens at all. The Treasury also noted banks and other financial providers already have access to this information and already report interest income above $10…
About 15% of the money owed the federal government isn’t collected, according to Natasha Sarin, a deputy assistant secretary at the Treasury Department… Just knowing the IRS would have access to some bank-account details might convince more taxpayers to pay what they owe.
The deputy assistant secretary argues there’s a direct relationship between the information the IRS has and a taxpayer’s voluntary compliance rate. “For ordinary wage and salary income, compliance with income tax liabilities is nearly perfect (1 percent noncompliance rate). In stark contrast, for opaque income sources that accrue disproportionately to higher earners…noncompliance can reach 55 percent….”
“Today’s tax code contains two sets of rules: one for regular wage and salary workers who report virtually all the income they earn; and another for wealthy taxpayers”
of this story at Slashdot.
Source:: Slashdot