The Biden administration’s new proposal would give the IRS the ability to monitor bank accounts
with more than $600 in them or with a total annual cash flow of more than $600. This includes personal checking accounts–but don’t worry just yet. The proposal is still in its early stages, and if put into legislation, would not go into effect until December 31st, 2022.

This proposal is intended to combat tax evasion for large businesses–the most recent IRS report states that there is a $166 billion gap between the taxes paid by corporations and the calculated taxes owed. Much of that owed tax money comes from wealthy account owners hiding money in personal accounts that are currently not allowed to be legally audited by the IRS.

The short answer–no, bank accounts are not yet being monitored as of the publishing of this blog.

What Will Banks Be Required To Disclose If The Legislation Passes?

If the new proposal is passed into law, then beginning on December 31st, 2022, banks will be required to disclose information about any personal checking account with more than $600. However, this doesn’t mean that all of your individual transactions and how the money is spent will be reviewed by the IRS. Banks will only be required to disclose the total cash flow into and out of the account, as opposed to every individual transaction, which is being falsely reported elsewhere.

If the proposal works as intended, this information will be useful to help the IRS detect under-reported income and collect money they are legally owed by business owners.

At the end of the day, don’t worry about being monitored just yet–and if the legislation does pass, the IRS can only look at the total amount flowing in and out of your account. What you spend your money on remains your business and your business only.

We’ll help you navigate your personal finances. Contact us today to speak to a licensed CPA!