IRS To Create New Spying Operations On American Taxpayers
Under the new administration’s tax plan, the Treasury Department is setting up a comprehensive financial spying operation. The proposal establishes a, “comprehensive financial account information regime.”
The law requires an annual report be submitted to the government showing, “gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner.”
The proposed legislation further states, “This requirement would apply to all businesses and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimus gross flow threshold of $600 or fair market value of $600.”
A footnote to that paragraph goes on to explain, “Current income reporting by financial institutions would be expanded to all entities, including certain corporations. Interest payments would be included in the loan account reporting. Transferee information would be reported for all real estate transactions on Form 1099-S.”
This doesn’t end with your basic garden variety bank or asset trading platform. It also applies to payment processors like Paypal and other credit card processing organizations. They’ll be required to divulge, “not only gross receipts but also gross purchases, physical cash, as well as payments to and from foreign accounts and transfer inflows and outflows.”
But wait. There’s more.
The reporting requirements also apply to, “crypto asset exchanges and custodians.” Those reporting requirements include
1 – Reporting on all accounts owned by U.S. Citizens
2 – Reports are also required when, “taxpayers buy crypto assets from one broker and then transfer the crypto assets to another broker.”
3 – All businesses (not just financial institutions) that receive, “crypto assets in transactions with a fair market value of more than $10,000 will have to report such transactions.”
When they mention “all businesses”, they mean you.
Let me leave you with this.
I’m surprised it took them this long to do something like this.
For those of you that are my clients, this shouldn’t worry or bother you. You know how crazy we are about compliance and getting things right.
You know that we tie out your payrolls, knowing that whatever deduction we take for labor is already reported to the government on your 941’s and W-2’s. We also tie out your sales tax returns knowing that the sales we report on your income tax returns had better be at least close to what has already been reported on the ST-1’s.
Now, the government will know what your gross deposits are as well. If you’re already a client, you know how crazy we are about tying your deposits to your sales, whether you are cash or accrual basis.
But what if you aren’t already a client? What happens if you deposit $3M into your accounts and only show $2M in sales on your return? The government will also have information on your loan proceeds. So if you didn’t take out an additional $1M in lending depositing it into your account, what do you think will happen?
What will happen is what should happen. You’ll probably get audited, and the government will probably start talking about income tax evasion.
If you’re one of our clients and following the law, this isn’t a worry. If not, then…
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Bookkeeping and Tax Work, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
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