Treasury Dept. Seeks to Track Transactions of Personal Bank Accounts over $600
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The cynical take is that it's not about the money, it's about having the power of arbitrary enforcement coupled with the longstanding ability to freeze accounts and seize assets in response to tax evasion. Imagine if the feds has an "off switch" for most small businesses and self employed individuals they could use to enforce compliance.
You are right in that it isn't only about the money. It has to be the surveillance aspect with the revenue generation as an added bonus. If something like this doesn't succeed now, then next time will it be for national security or the safety of the children?
We love to enforce the laws against the poor. This just seems like another avenue by which to do so. Look at how frequently crimes like robbery are mentioned in the news-- but what about much more endemic crimes typically perpetuated by the ownership class, like wage theft (https://i.redd.it/grnr8kxbl6zz.jpg), and how little you hear about them.
The rich people and rich companies (10lb trout in your example, since it may not be clear to everyone that 10lb is no small trout) have big enough dollar amounts at stake to be worth fighting for and will fight but the cost of running that process will be just a formality compared to all the $100-500 checks they'll receive.
I don't think it's about the surveillance aspect or the money except as a means to the end of having more power to control who gets economically marginalized.
Look at the difficulty the government had enforcing executive policy and controlling the narrative during the pandemic (compare with the first few years of the war on terror for example). They don't want to get caught with their pants down the next time around.
But Joe the Electrician who does most of his work under the table? That's easy, so that's where they focus.
Keeping money offshore doesn't make sense for the little guy. You're required to report it with significant penalties for non-compliance, and the anti-tax-deferral rules for controlled foreign corporations basically make repatriating just enough money to pay salaries a pointless exercise.
Since BTC, ETH, etc. are public ledgers, you're basically already giving every government agency in the world the ability to track your balances and transactions without any additional regulation or infrastructure required. Of course, if you're super careful, they might not know it's you yet, but if they really want to, they can find out and make sure you don't sleep very well at night while they wait.
Furthermore, in the latter scenario, that cash is eventually going to get deposited back into a regulated institution (to pay credit card bills, etc.). If anything, a person depositing thousands of dollars in cash on a regular basis is going to draw more scrutiny, especially if they're not running a cash business.
Which leads to the obvious solution: you're going to buy that Wendy's where you're exchanging your USBs for cash. Congratulations. You're now officially a money launderer!
While that's not to say that aged shells, nominee directors, etc. don't serve a purpose for certain people in certain situations, a lot of this stuff is just designed to enrich the service providers through fees and provides very little meaningful value in terms of privacy and protection.
A lot of Russians use offshore structures to protect their assets from the state. Also, Russia has a territorial tax system under which nonresidents are taxed only on their Russian-source income. Many wealthy Russians live overseas, so if you make your money abroad and live abroad, there's nothing inherently illegal about keeping your money abroad if you're a Russian.
Basically, the reasons a Russian would go offshore are a bit different from the reasons an average American would.
Finally, in cases where a Russian was offshore for shady business, you should recognize that the long arm of the Russian authorities isn't that long. The US, on the other hand, can functionally knee-cap financial institutions anywhere in the world for refusing to do what it wants.
As evidence of this, consider that even Chinese banks will comply with US sanctions if they feel there's a risk to their US dollar operations:
https://www.bloombergquint.com/global-economics/chinese-bank...
Big companies use complex international structures to dodge taxes and regulations legally. Currently, there are no reasons to do that for a random small business; if there is, there may be demand. Kinda like people register their companies in Delaware even though it doesn't make "logical" sense; just to (legally) get the regulatory advantages.
This is speculation, obviously, based on the direction this goes with the account surveillance.
Firms exist to economize on the cost of coordinating economic activity.
Firms are characterized by the absence of the price mechanism.
https://www.kellogg.northwestern.edu/faculty/hubbard/htm/res...
Funny where their priorities lie.
Justice Douglas, in his dissenting opinion on the 1974 California Bankers Association v Shultz case that upheld the constitutionality of the Bank Secrecy Act, provided an excellent argument against warrantless mass-surveillance and the doctrines, like Total Information Awareness, that promote it:
It is estimated that a minimum of 20 billion checks - and perhaps 30 billion - will have to be photocopied and that the weight of these little pieces of paper will approximate 166 million pounds a year. 6
It would be highly useful to governmental espionage to have like reports from all our bookstores, all our hardware [416 U.S. 21, 85] and retail stores, all our drugstores. These records too might be "useful" in criminal investigations.
One's reading habits furnish telltale clues to those who are bent on bending us to one point of view. What one buys at the hardware and retail stores may furnish clues to potential uses of wires, soap powders, and the like used by criminals. A mandatory recording of all telephone conversations would be better than the recording of checks under the Bank Secrecy Act, if Big Brother is to have his way. The records of checks - now available to the investigators - are highly useful. In a sense a person is defined by the checks he writes. By examining them the agents get to know his doctors, lawyers, creditors, political allies, social connections, religious affiliation, educational interests, the papers and magazines he reads, and so on ad infinitum. These are all tied to one's social security number; and now that we have the data banks, these other items will enrich that storehouse and make it possible for a bureaucrat - by pushing one button - to get in an instant the names of the 190 million Americans who are subversives or potential and likely candidates.
It is, I submit, sheer nonsense to agree with the Secretary that all bank records of every citizen "have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings." That is unadulterated nonsense unless we are to assume that every citizen is a crook, an assumption I cannot make.
Since the banking transactions of an individual give a fairly accurate account of his religion, ideology, opinions, and interests, a regulation impounding them and making them automatically available to all federal investigative agencies is a sledge-hammer approach to a problem that only a delicate scalpel can manage. Where fundamental personal rights are involved - as is true when as here the [416 U.S. 21, 86] Government gets large access to one's beliefs, ideas, politics, religion, cultural concerns, and the like - the Act should be "narrowly drawn" (Cantwell v. Connecticut, 310 U.S. 296, 307 ) to meet the precise evil. 7 Bank accounts at times harbor criminal plans. But we only rush with the crowd when we vent on our banks and their customers the devastating and leveling requirements of the present Act. I am not yet ready to agree that America is so possessed with evil that we must level all constitutional barriers to give our civil authorities the tools to catch criminals.
Also worth noting that the threshold for reporting transactions when the BSA was passed, of $10,000, was worth $55,490 after adjusting for inflation. Now Treasury wants to decrease it to $600, which is a 92X decrease from the original threshold. If you factor in the 41% increase in real median income since 1974, the threshold the Treasury is pushing for would be 130X smaller, as a share of median income, than it was when the BSA was enacted.
The BSA fell down the the slippery slope to total mass-surveillance.
Agreed. The Community Bankers association is requesting that U.S. banking clients contact their elected representatives. Only 90,000 have spoken up so far, more are needed to push back against the normalization of dangerous proposals.
https://www.icba.org/bank-locally/consumer-alert-from-icba & https://www.icba.org/newsroom/news-and-articles/2021/08/19/r...
> While community banks do not endorse such broad IRS access to their customers’ account information, consumers need to be aware of the potential effects of this proposal. Mandating new, broad bank account reporting to the IRS would infringe on the privacy of bank customers, push more people away from a banking relationship and overload the IRS with more personal information about American citizens than it can possibly process or keep safe from a data hack. To be heard in Washington before this bank IRS reporting regime is enacted, you can send the following customizable message directly to your members of Congress and ensure your voice is heard.
https://home.treasury.gov/system/files/131/General-Explanati...
The proposal under discussion is under the header "INTRODUCE COMPREHENSIVE FINANCIAL ACCOUNT REPORTING TO IMPROVE TAX COMPLIANCE", page 94 of 114 in the PDF, labelled page 88 in the source document
I don’t think it’s possible to have a fair income tax. It’s also irrelevant.
Bond issuance almost entirely funds the government already, it requires zero enforcement, zero taxpayer burden, and it’s impossible to cheat. Income tax is mostly an excuse for legal surveillance of other matters. Some of those might be reasonable and good, but the voters should decide that.
As much as I am a fan of Bitcoin, is it not possible to create an alternative currency, where the value of the currency is pegged to the state currency, but transactions are encrypted and untraceable. Sorr of like an underground banking system.
*It is backed by traditional crypto, in addition to USDC and other stablecoins which are in turn backed by real dollars, so it's partially backed by dollars.
> ... compelling banks to share data on customer accounts, a move that requires congressional approval, would amount to just an initial step in narrowing the gap ... The IRS would need to figure out a way to use the information to decide which business owners to audit and what questions to ask them. The plan also includes billions of dollars for technology and staffing so the IRS could digest and analyze that information.
https://www.dailymail.co.uk/news/article-9973671/Bidens-plan...
> One key prong of President Biden’s plan to bankroll Democrats’ $3.5 trillion budget plan is to monitor gross inflows and outflows from an individual’s bank account ... some are concerned that it might run up against the Fourth Amendment and those who can’t afford to fight tax audits or move their money into offshore accounts ... The proposal would require banks to report to gross inflows and outflows to the IRS, including transactions from Venmo, PayPal, crypto exchanges and the like ...
Biden Tax Plan Leans on Banks to Help Find Unreported Income https://www.wsj.com/articles/biden-tax-plan-leans-on-banks-t...
>The proposal would require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirement would also extend to peer-to-peer payment services such as Venmo but wouldn’t require individuals and businesses to report any additional information to the government, according to people familiar with the plan. Financial institutions already must report interest, dividend and investment income, and the IRS can get bank information during audits.
Here's a statement by community banks: https://news.ycombinator.com/item?id=28562153
Lots of fine details to work out there though.
I'm having difficulty seeing how this isn't a 4th Amendment violation, or something that'd have to be gated behind a legislative statute.
Make no mistake. The U.S. financial system is one of the greatest "soft power" projectors on the planet. It is most certainly not being utilized in a way that helps you.
My response: "not this time."
They looked shocked, but everything that has happened since the transfer looks like an operation warp speed towards authoritarianism.
> As Mises noted, capitalism suffocates without loopholes.
The definition of “loophole” here, though, is actual tax avoidance. Wrong tack to take. I’ve worked in small and marginal businesses, we paid the taxes. No sympathy here.
The article refers twice to the idea that the reporting will be on movements of $600 or more- is that right? A plain reading of the text (below) suggests that the account balance is of $600, and the movements will be of any size.
The text, which is short and could have been included, is:
> This proposal would create a comprehensive financial account information reporting regime. Financial institutions would report data on financial accounts in an information return. The annual return will report 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. This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts,2 with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600. Other accounts with characteristics similar to financial institution accounts will be covered under this information reporting regime. In particular, payment settlement entities would collect Taxpayer Identification Numbers (TINs) and file a revised Form 1099-K expanded to all payee accounts (subject to the same de minimis threshold), reporting not only gross receipts but also gross purchases, physical cash, as well as payments to and from foreign accounts, and transfer inflows and outflows. Similar reporting requirements would apply to crypto asset exchanges and custodians.
> Separately, reporting requirements would apply in cases in which taxpayers buy crypto asset from one broker and then transfer the crypto assets to another broker, and businesses that receive crypto assets in transactions with a fair market value of more than $10,000 would have to report such transactions.
> The Secretary would be given broad authority to issue regulations necessary to implement this proposal.
The proposal would be effective for tax years beginning after December 31, 2022.
This will also increase the cost of government to track it all. I expect it will disproprtionately focus on the lower-to-middle income businesses and people, not the high-end deadbeats, since it’ll be easier to grab pennies from many than millions from a difficult few.
They call it a democracy, but both sides work toward one goal: give more power to the Government.
Source document: https://news.ycombinator.com/item?id=28566846
[1]:https://bfsi.economictimes.indiatimes.com/news/policy/digita...