“I think this proposal has been seriously misrepresented”: Janet Yellen defends the plan for the IRS to spy on accounts greater than $ 600, claiming that this will help get billionaires to pay more taxes
- The finance minister has been pushing for strict reporting requirements since September
- She wants the IRS to see all accounts over $ 600
- Yellen has argued that the move will reduce the amount hidden by billionaires
- Critics fear the ruling will allow the IRS to spy on Americans’ bank balances
- Yellen told CBS on Tuesday that the proposal had been “mischaracterized”.
- She said there would be “no reporting of individual transactions by a person”.
The Treasury Secretary has defended plans to monitor banking transactions in excess of $ 600, insisting that the program was designed to end “tax fraud” by billionaires and would not mean that American accounts would be recorded.
The new proposal requires financial institutions to report annually the total amount in and out of the bank, as well as credit and investment accounts, if the accounts are valued at $ 600 or more within that year, or if the total transactions are $ 600 Dollars or more is a year.
In simpler terms, it means banks must report these numbers to the IRS if the total amount of deposits and withdrawals from a credit or debit account is at least $ 600. This includes paychecks or money transfers from apps like PayPal.
Amid the backlash in Congress, some suggested raising the threshold from $ 600 to $ 10,000.
But Treasury Secretary Janet Yellen insisted Tuesday that there was a lot of unjustified panic.
“Does that mean the government is trying to look into our paperbacks?” CBS’s Norah O’Donnell asked Yellen in an interview. ‘You want to look at $ 600 transactions?’
Yellen replied: “Absolutely not.
“I think this proposal has been seriously misrepresented. The proposal does not include reporting individual transactions by a person. ‘
Treasury Secretary Janet Yellen said Tuesday that her plans to allow the IRS to know how much money is in people’s bank accounts and monitor transactions over $ 600 had been “seriously misrepresented.”
Norah O’Donnell asked Yellen if the IRS would review all transactions above $ 600. Yellen replied, “No way,” stressing that it was only for people suspected of tax fraud
“There is a lot of tax fraud and fraud going on.” Treasury @SecYellen told @NorahODonnell the proposed $ 600 IRS reporting requirement for banks is “absolutely not” a way for the government to look in American paperbacks, but rather to hold billionaires accountable. pic.twitter.com/M3VKOhdtSu
– CBS Evening News (@CBSEveningNews) October 12, 2021
Yellen insisted that the move aimed to reduce under-reporting of income by wealthy people in order to avoid taxes.
“The big picture is, you see, we have a tax gap that is estimated at $ 7 trillion for the next decade,” she said.
“Namely, falling short of what the IRS collects from individuals failing to report the income they earned.”
The White House estimates the plan would raise more than $ 460 billion for the federal government over the next decade.
Yellen told O’Donnell that the problem “is particularly prevalent with high-income individuals whose income is opaque and the IRS does not have any information about it”.
She said most people would not be labeled under the new system.
“If you make a paycheck, you get a W-2, the IRS knows about it,” she said.
“But there is a lot of tax fraud and fraud going on with high-income individuals and opaque sources of income that are not reported to the IRS, and all that’s in this proposal is a few aggregated numbers about bank accounts – the amount that” im Received in the course of the year, the amount that was paid out in the course of a year. ‘
She added, “If someone reports an income of $ 10,000 and $ 3 million has been deducted from their checking account, it tells the IRS that they are someone you might want to investigate.”
Yellen denied the plan is aimed at the IRS spying on people, but it has been received with considerable skepticism by Republicans and banks
Yellen has put up a lot of resistance to the proposal.
Senator Cynthia Lummis, a Republican who represents Wyoming, pointed out during a Senate hearing on Sept. 28 that the “$ 600 threshold is usually not where you will find the massive tax revenues you think you will get. that the Americans are cheating on you. “
Yellen replied, “That is correct, but it is important to have comprehensive information so that individuals cannot play the system and have multiple accounts.”
Banks and their trading groups are lobbying the proposal, saying it would give the IRS undue control over a person’s finances.
Banks are already submitting tax forms to the IRS about interest income from their clients’ accounts, but the new proposals would provide information about account balances as well.