Could Legislation Give the IRS the Power to Track Transactions on Any Bank Account With More Than $600?

A viral claim is largely accurate.

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A number of viral social media posts have claimed that Congress is attempting to pass a bill that would give the Internal Revenue Service the power to track all financial transactions coming to and from bank accounts with more than $600. 

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  1. Avatar photo
    Michael Carpenter

    The Federal Government already receives notification for transactions of $10,000 or more from your bank.
    From the IRS: "When a customer uses currency of more than $10,000 to purchase a monetary instrument, the financial institution issuing the cashier's check, bank draft, traveler's check or money order is required to report the transaction by filing the FinCEN Currency Transaction Report (CTR)."
    If it looks like you are "structuring" transactions to avoid the $10k limit, that can also lead to legal problems with the IRS. I ran afoul of this when my bank wouldn't permit me to make a transaction while I was consolidating money for a down-payment on my house. The number of transactions within a month put me in danger of looking like I was structuring transfers to avoid the $10k reporting limit.

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    1. Avatar photo
      Michael Carpenter

      As I understand it, the legislation in question would require banks to add two numbers to a 1099 for all accounts with greater than $600 in activity: gross deposits and gross withdrawals. It isn't too hard to see the slippery slope here so I really hope that it gets taken out or, even better, that the entire infrastructure bill fails.

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    CoArch

    This will create an even larger black market economy.

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    Victor Clairmont

    I want less power in the hands of the IRS, not more.

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    1. Avatar photo
      Ben Connelly

      Indeed

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  4. Tw

    Next iteration of the bill raises this to $10,000. But it is the total of the transactions, not the balance. So your child at college who flows more than $10k through their accounts for rent, work income and monthly expenses. As will our parents who have even the minimum of social security payments.

    Privacy is a human right which we did not give away when we formed the Constitution. Drag nets are an invasion of privacy and are suppose to be prevented by the 4th amendment.

    If the government has reason to audit me, either randomly or because of reasonable suspicion, they can ask me for my bank records.

    The IRS cannot be trusted. They were weaponized during the Obama years and then stonewalled Congress (remember the large number of disk failures they had?). And more recently tens of thousands of tax returns were either stolen or released to ProPublica, and in either case demonstrate the IRS cannot be trusted with vast powers.

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    Joe Delanis

    I don't suppose it's a coincidence that $600 is the exact dollar amount at which cash income must be declared as 1099 income...

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      Steve Eggleston

      Are there papers to be delivered, much less paper boys (or girls) anymore?

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        George.Skinner

        When I cancelled my last physical delivery earlier this year, it was being delivered by a grown woman driving a minivan. The paper was a lot thinner than it used to be, too. I didn’t cancel my subscription, though - just found that I preferred reading it on my iPad , and didn’t need to fill my recycling with a steady (but dwindling) supply of newsprint.

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  7. R. James

    So much for the right of the people to be secure in their persons, houses, papers and effects, against unreasonable searches and seizures...Big Brother sees all, regardless of probable cause, and will squeeze you for every penny. But remember there is "zero cost" to this reconciliation bill...

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    Steve Eggleston

    In addition, this $600/year cash flow reporting requirement would apply to investment accounts, crypto asset exchanges, and payment settlement entities (credit card companies, PayPal, et al), with the payment settlement entities also reporting gross purchase amounts by "payees" (those who accept payments through the system) made through that system. Given every PayPal (and like companies) customer is a "payee", even if only potentially, it (likely) means that everybody who makes at least $600.01 in purchases in a year through PayPal (or lower if they accept PayPal payments) will be on the IRS radar.

    I should note that payees already have gross receipts (with "card not present" receipts broken out) and the number of transactions reported if gross receipts exceed $20,000 and the number of transactions exceed 200.

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    Bill Nelson

    I intend to set up 3 different accounts and transfer $601 each day between the three. And change my name to Guido.

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About Alec Dent

Alec Dent is a former culture editor and staff writer for The Dispatch.
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