Treasury secretary insists the rule is aimed at ‘high-income individuals’
Treasury Secretary Janet Yellen continued her pitch for the Biden administration’s proposal that would require banks to report each customer’s transactions of $600 or more to the IRS, saying it is aimed at the wealthy. , “There is a lot of tax fraud and fraud going on.”
The White House estimates the plan will raise more than $460 billion for the federal government through ramped-up enforcement over the next decade, and the administration is trying to sell the plan as a way to make money from the rich — Although all Americans will be subject to the rule.
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In a clip that aired Tuesday evening, CBS News’ Nora O’Donnell asked Yellen about the plan, “Does this mean the government is trying to peek into our pocketbooks if you want to see the $600 transaction.” Huh?”
“Absolutely not,” the Treasury secretary insisted, “I think this proposal is seriously misrepresented. The proposal does not include any reporting of personal transactions of any individual.”
Then Yellen explains how the IRS doesn’t get enough information about how “individuals” are.
“Look, the big picture is that we have a tax gap that is projected to be $7 trillion over the next decade,” she continued. “That is, a reduction in the amount that the IRS is collecting because of individuals’ failure to report earned income.”
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O’Donnell asked, “But it’s among the billionaires. Is it among the people who are transferring $600?”
“No, this is one of the high-income individuals whose income is opaque and the IRS doesn’t get to know about it,” Yellen said. “If you earn a paycheck, you get a W-2, the IRS knows about it. But for high-income individuals with opaque sources of income that aren’t reported to the IRS, there’s a lot of tax fraud and fraud going on.” And what is included in this proposal is some total number of bank accounts – the amount that was received during the year, the amount that was withdrawn during the year.”
Yellen then gave an example.
“If a person reports income of $10,000, and $3 million has been taken out of their checking account, that tells the IRS that he is a person you can audit.”
Yellen did not say who the administration would consider “rich” nor did he rule out pursuing salary earners.
This isn’t the first time he’s been asked why the $600 offer is so low if the IRS is allegedly targeting “billionaires.”
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Last month, Sen. Cynthia Lumis, R-Vyo. grilled Yellen on the IRS proposal, telling the Treasury secretary during a hearing that “the $600 limit is usually not where you think that massive amount of tax revenue will go. Americans are cheating on you.”
“That’s right,” Yellen acknowledged, “but it’s important to have comprehensive information so that individuals don’t play the system and have multiple accounts.”