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Saturday, September 11, 2021

The IRS Wants ALL Your Banking Transactions!

Chip Ford's CLT Commentary

It’s sometimes amazing how the latest crisis drops on my doorstep from out of nowhere when least expected, from the least expected sources.

I’m trying to get to this week’s CLT Update, eventually.  I worked until after 3:00 AM last night (oops, this morning) scrambling to complete the mailing package that’ll be going out to you soon containing petitions and instructions for signatures on them.  I need to get it done and to the printer on Monday morning.

After a short nap I awoke to this bombshell.

This is truly scary stuff.  Frightening enough that I took a detour while running on my CLT treadmill so I can get this information out to you immediately.  Maybe if we all act quickly enough it can be stopped.

I received the following alert from my local bank late yesterday, just got around to reading it this morning when I awoke — then did a lot of further research to determine its authenticity.  I couldn’t believe it at face value, needed to dig deeper, had to be convinced.

It is for real.

If this ever becomes law (as part of the Congressional Democrats’ $3.5 Trillion-Plus “reconciliation budget” that can be passed narrowly if all Democrats vote for it, even if all U.S. House and Senate Republicans vote against it) your bank will be forced to provide to the IRS every single transaction you ever make again through your bank account(s).

What could be so bad with the IRS being given such unprecedented, extraordinary power?

Yeah, that’s rhetorical sarcasm.

The IRS and the federal government will have a permanent record provided to it by your bank of every single cent you spend and receive through your bank — every check you write:  When, to whom and for what; every cent you deposit from whomever or whatever the source.

No court subpoenas will ever again be required if the IRS (and by extension the federal government) targets you, wants to know every breath you take, every move you make, every step you take.

(Can’t help that last link: I’ve got Sting and The Police playing in the background for inspiration.)

I received the following warning from my local bank about this aggressive federal government invasion of financial privacy which even my bank found alarming and is actively warning customers to oppose, rallying their customers to resist!  Good for them and thank you!

View notice on web

Independent Community Bankers of America (“The Nation's Voice for Community Banks”) has provided a video you can watch:

They’ve made registering your objection easy to this latest despicable power-grab by contacting your U.S. Congressman/woman or U.S. Senator and instructing them to vote against this abomination:

A couple of weeks ago in the August 29 CLT Update I wrote:

. . . Thirty-six years later for me that war against Big Government continues.

Over the decades that have followed we’ve certainly found out what came next, just as I'd expected it would.  Mandatory masking and forced vaccinations are just the latest iteration in a long and steady devolution of our liberty.

Back in 1992 when high tech was beginning to bloom, when the Internet was in its infancy, doing hours of research at the public library and using my first computer (a dinosaur IBM PS2-286 that ran on MS-DOS) I wrote “High Tech and the Age of Intrusion.”

I didn’t need to be Nostradamus to see the future back then — and more recently didn't hesitate when I saw it was time to bail out of The People's Republic while I still could.  How?  Precognition, situational awareness, or keen and constant observation of news then connecting the dots — who knows?

Government keeps coming at us, always trying to grab more, more, always more power.  Who needs Nostradamus to see this?

But even cynical me is shocked at this audacity and I didn’t think anything coming from government was capable of shocking me anymore.  Thank God its stealth has been exposed, hopefully in time — and hopefully it can be stopped.

Chip Ford
Executive Director

Thursday, September 9, 2021

IRS account monitoring plan brings consumers into reconciliation debate

By Rebeca Romero Rainey, opinion contributor

Joe Manchin (D-W.Va.) has raised concerns about the $3.5 trillion price tag of budget-reconciliation legislation that Congress is set to take up this week, Americans are increasingly speaking out against a provision that would require banks to report their customers’ account information to the Internal Revenue Service.

The proposal — first laid out by the Treasury Department and set to be introduced during this week’s committee markups — is designed to close the “tax gap” between what American taxpayers pay and what they owe to help fund the spending bill. But the comprehensive, untargeted nature of the proposal is eliciting broad opposition not just from bankers who would be required to report the information to the IRS, but from the consumers they serve.

A poll commissioned by my organization — the Independent Community Bankers of America — and conducted by Morning Consult found that two-thirds of voters (67 percent) oppose the IRS collecting their bank account information. More than half (53 percent) of voters strongly oppose the plan, while only 22 percent support it.

Further, more than three in five voters (64 percent) do not trust the IRS to monitor their deposit and withdrawal information. And more than half (54 percent) do not trust the agency to keep their financial data safe from data breaches. This latter data point isn’t unexpected given the recent high-profile tax return leak the IRS is investigating as well as consumer anxiety over “math-error notices” triggered by stimulus payments.

The polling response indicates that consumers find IRS monitoring of their personal financial account transaction histories to be an invasion of privacy that is no business of the government. Consumers are also expressing concerns that the plan could potentially harm small businesses by increasing their tax liability.

What’s more, intrusive account reporting to the IRS could undermine Washington’s ongoing policy initiative of reducing the unbanked population. With distrust of institutions and government agencies inhibiting banking relationships — particularly among marginalized communities and those who have fled authoritarian regimes — indiscriminate financial account reporting risks increasing the challenge of reaching these individuals and families.

Instead of gathering heaps of new taxpayer information, consumers indicate they support closing the tax gap by making better use of the data the IRS already has. Similarly, a recent joint letter to congressional leaders from the International Franchise Association, National Federation of Independent Business, U.S. Chamber of Commerce, and other business groups advocates identifies less intrusive ways of closing the tax gap.

As the IRS proposal takes shape in Washington, community bankers will continue informing their customers of its potential impact while they continue to aid the economic recovery in their local communities.

Rebeca Romero Rainey is president and CEO of the Independent Community Bankers of America.

U.S. Department of the Treasury

May 2021

Pages 88-89


General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals



Current Law

Business income is subject to limited information reporting.  Current information reporting of gross receipts exists for only certain types of revenue (from Forms 1099-MISC, 1099-NEC, and 1099-K), and there is no information reporting on total deductible expenses. 

Reasons for Change

The tax gap for business income (outside of large corporations) from the most recently published Internal Revenue Service (IRS) estimates is $166 billion a year. [Footnote #1]  The scale of this revenue loss is driven primarily by the lack of comprehensive information reporting and the resulting difficulty identifying noncompliance outside of an audit. While the net misreporting percentage is only 5 percent for income subject to substantial information reporting, the net misreporting percentage for certain categories of business income exceeds 50 percent.

Requiring comprehensive information reporting on the inflows and outflows of financial accounts will increase the visibility of gross receipts and deductible expenses to the IRS. Increased visibility of business income will enhance the effectiveness of IRS enforcement measures and encourage voluntary compliance.


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 [Footnote #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 assets 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.


#1 - Computed from individual income tax business income, small corporations, and self-employment tax components.

#2 - Current income reporting by financial institutions would be expanded to all entities, including certain corporations.  Interest payments would be included in the loan account reporting.  Transferee information would be reported for all real estate transactions on Form 1099-S.

117th Congress (2021-2022)

H.R.1200 - Stop CHEATERS Act  (PDF)

S.1788 - Restoring the IRS Act  (PDF)

S.1857 - Stop CHEATERS Act  (PDF)

NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to:

Citizens for Limited Taxation    PO Box 1147    Marblehead, MA 01945    (781) 639-9709