Democrats Pare Back Bank Account Snooping Plans

Some recent tax resistance news of note:

  • The Biden administration and Democrats in Congress have been looking for coins under the couch cushions that might help them pay for some of their expensive ambitions. One plan they came up with was to require banks, credit unions, and other such financial institutions to make annual reports to the IRS of all accounts that had more than $600 of combined deposits or withdrawals over the course of the year. The theory was that the IRS could match this information with the declared income of the account owners, and, if there was a significant discrepancy, could launch an audit to investigate — thereby making it a bit more difficult for people to earn and spend undeclared income, and so increasing the tax base.

    Republicans seized on this proposal as a good wedge with which to spoil the Democrats’ plans, and painted it as an Orwellian nightmare of the government peering into everybody’s private business. At first, the Democrats doubled down, but as anticipated, they have now pared back the proposal such that it will only apply to accounts with at least $10,000 of combined deposits and withdrawals, and exempting certain deposits (such as direct deposit paychecks or social security checks) and withdrawals (such as for the purchase of a home). Exemptions like those may make the proposal easier to sell on the talk shows, but they would make it considerably more complex for banks to comply, and so this is unlikely to dampen their increasingly loud and organized opposition. And the Republican kvetching, which had predictably floated free from the actual facts about the legislation almost immediately anyway, isn’t likely to get any quieter. It remains to be seen whether the proposal will survive its further journey through the legislative meat grinder.

    Why this matters for American tax resisters is this: One of the easiest and most common ways for the IRS to take money, from a resister who refuses to pay voluntarily, is to seize it from their bank account. For the agency to make such a seizure, though, they must first become aware of the bank account. The usual way they discover such an account is when the bank sends an annual 1099 report to the IRS indicating how much interest income was earned by the account. But in recent years, with interest rates so low, banks and credit unions have often offered accounts that do not generate any interest (they use other sorts of perks to entice customers instead). Such accounts therefore do not generate 1099s and so do not create a paper trail for the IRS to follow. So resisters have been able to use accounts like this to protect their money from IRS seizures. Under the new proposals, such accounts would be reported to the IRS if they had a sufficient amount of deposits and/or withdrawals, and so this protection would be diminished or eliminated.

  • If you’re a low-income/simple-living tax resister, or just a frugal sort of person, you may be interested in this new guide to healthy eating on an affordable budget.
  • Federal tax revenues are sharply up , largely thanks to booming fortunes of corporations and the wealthy. This appears to be more than just a rebound from the economic challenges of the pandemic, as the numbers are also way up from the pre-pandemic .
  • The global human ragtag guerrilla defense against the traffic ticket robot hordes continues. A robot collaborator lost his cool while being thwarted by a parked car in England, while French rebels have found spraypaint to be a quick and easy way of blinding and disabling the machines there.