‘This has been seriously mischaracterized’: Janet Yellen defends plan for IRS to snoop on accounts
The Treasury Secretary has defended plans to monitor bank transactions of more than $600, insisting that the scheme was designed to end ‘tax fraud’ by billionaires, and would not mean Americans’ accounts were recorded.
The new proposal requires financial institutions to annually report the total amount that went in and out of the bank as well as loan and investment accounts if within that year the accounts hold a value of at least $600 or if the total transactions are $600 or more in a year.
More simply, this means that if total funds flowing in and out of a credit or debit account equal at least $600, banks have to report those figures to the IRS. This includes paychecks or money transferred from apps like PayPal.
Amid the backlash in Congress, some proposed raising the threshold from $600 to $10,000.
But Treasury Secretary Janet Yellen insisted on Tuesday that there was a lot of unwarranted panic.
‘Does this mean that the government is trying to peek into our pocket books?’ CBS’ 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 mischaracterized. The proposal involves no reporting of individual transactions of any individual.’
Janet Yellen, the Treasury Secretary, said on Tuesday that there had been ‘serious mischaracterization’ of her plans to allow the IRS to know how much money is in people’s bank accounts and monitor transactions above $600
Norah O’Donnell asked Yellen if the IRS would be looking at all transactions over $600. Yellen replied: ‘Absolutely not,’ emphasizing that it was only for people who were suspected of tax fraud
“There’s a lot of tax fraud and cheating that’s going on.” Treasury @SecYellen tells @NorahODonnell the proposed $600 IRS reporting requirement for banks is “absolutely not” a way for the government to peek into American’s pocketbooks but to hold billionaires accountable. pic.twitter.com/M3VKOhdtSu
She said that most people would not be flagged under the new scheme.
‘If you earn a paycheck, you get a W-2, the IRS knows about it,’ she said.
‘But high-income individuals with opaque sources of income that are not reported to the IRS, there’s a lot of tax fraud and cheating that’s going on, and all that’s involved in this proposal is a few aggregate numbers about bank accounts – the amount that was received in the course of the year, the amount that went out in the course of a year.’
She added: ‘If someone reports an income of $10,000, and they had $3 million go out of their checking account, that tells the IRS that’s an individual that you might audit.’
Yellen denied that the plan is designed for the IRS to spy on people, but it has been met with considerable skepticism by Republicans and banks
Yellen has faced significant pushback against the proposal.
Senator Cynthia Lummis, a Republican representing Wyoming, pointed out during a September 28 Senate hearing that the ‘$600 threshold is not usually where you’re going to find the massive amount of tax revenue you think Americans are cheating you out of.’
Yellen replied: ‘That’s correct, but it’s important to have comprehensive information so that individuals can’t game the system and have multiple accounts.’
Banks and their trade groups are lobbying against the proposal, saying it would give the IRS excessive control over an individual’s finances.
Banks already submit tax forms to the IRS about interest earned by their customers’ accounts, but the new proposals would also provide information about account balances.