Hinson wildly exaggerates on IRS proposal to catch tax evasion

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If you’ve listened to Rep. Ashley Hinson recently, you’d think as part of a new proposal, every time you pay your rent, buy a new TV or computer, or spend at least $ 600, a notification will appear on the screen of an IRS employee who tracks your every move.

“There is a new Democratic proposal to allow the IRS to essentially monitor transactions of $ 600 or more,” Hinson said at a municipal forum in Maquoketa on Monday. “… I also see this as an unprecedented invasion of privacy and government overreach … I don’t think they need to know when you’re going to spend $ 600 on the grocery store or $ 600. $ on your rent or $ 600 on a utility payment… I think this is a government espionage scheme at its worst.

She added that she had already heard of some who went to their bank to withdraw their money “because they didn’t want the government to know how much they were spending”.

But there’s a problem with Hinson’s claims: the way she presents them is a savage exaggeration.

The proposed tax rule would require banks to report the total amount of money entering and leaving certain bank accounts for a full year. The initial proposal targets accounts of at least $ 600, but Democrats yesterday (after Hinson made his comments on Monday) decided to raise the threshold to $ 10,000.

The proposal does not require reporting individual transactions or what people buy, which Hinson implies and categorically states, only the general statement of cash flows in bank accounts each year, reported once a year.

The proposed declaration would reduce tax evasion, according to officials at the US Department of the Treasury. IRS estimates show a discrepancy of $ 166 billion per year between taxes owed by businesses (excluding large businesses) and taxes actually paid.

USA Today’s fact-check attributed the claim to an InfoWars article published on Oct. 10, which accused the Treasury Department of saying the IRS would monitor transactions, without explaining that aggregate inflows and outflows are not. not the same as transactions.

“Although the claim is based on reality, many facts are wrong,” USA Today noted. “The assertion of the claim is a proposal of the Biden administration, not a decision set in stone. The Treasury cannot “declare” any changes to the law because it is a legislative power that rests with Congress. And even if the proposal passes, banks would not give access to individual transactions, but only to the total amount entering and leaving an account each year. “

“Currently, the IRS does not know whether taxpayers who earn income in a hard-to-track manner are meeting their annual tax obligations,” Assistant Under Secretary for Economic Policy Natasha Sarin wrote in an article published on the Treasury Department website that explains the proposal.

The post explains that most American workers pay the appropriate amount of taxes, but this is not true for those who don’t fill out W-2 forms.

“However, high-income earners often accumulate business income or passed-on income that is not reported by a third party to the IRS, so taxes are less likely to be paid appropriately,” he said. argues Sarin. “This is largely the reason why, in 2019, the richest 1% of earners in the United States were responsible for about $ 163 billion in unpaid taxes.”

The Treasury Department clarified that the banks would only provide one more piece of data on what they already transact to the IRS. This additional information will increase the chances of detecting tax evasion and exercise additional control over who is in a position to under-report.

Yet those details didn’t stop Hinson from tweeting this misleading and exaggerated information to his 12,100 followers as well.

U.S. Senator Joni Ernst from Iowa also tweeted about it.

But there are potential issues with the proposal, including those that don’t require exaggerated false claims.

Iowa Credit Union League director of government affairs Gracie Brandsgard said her organization had concerns about the impact of such a policy on trust and relationships with members of credit unions.

“There are a lot of people right now who don’t have a lot of faith in institutions, in government and there are a lot of unbanked people across the country but in Iowa as well,” he said. she declared.

If these people knew that more information was being reported, Brandsgard said it could make it more difficult to build a relationship with them and make them feel comfortable working with the credit union.

There are potential obstacles to enforcing this rule change, including the IRS’s understaffing and the use of outdated technology. But how to implement the proposal can be worked out with Congress as it is debated.

“This additional assignment to the IRS to help them grow their workforce and get additional resources to be able to do the work that is already on their plate, I think it’s a good start,” Brandsgard said.

At a press conference yesterday, US Senate Finance Committee Chairman Ron Wyden told reporters: “These are wealthy business owners at the top of the hierarchy. This is where the unpaid taxes are.

by Nikoel Hytrek
10/18/21



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