Fact check: Claim about the IRS monitoring bank accounts over $600 exaggerates reality

Ella Lee
USA TODAY

The claim: Treasury Department 'declares' IRS will monitor transactions in all U.S. bank accounts over $600

A tax law proposal by the Biden administration has led social media users to question whether the government is overstepping on Americans’ financial privacy.

“Biden’s Treasury Dept. Declares IRS Will Monitor Transactions of ALL U.S. Accounts Over $600," reads the headline of a Sept. 10 InfoWars story that has been shared widely on Facebook.

The same claim popped up in various iterations on social media, like a Sept. 22 Instagram post claiming Biden's proposal would give the IRS "direct access to your bank transactions." It accumulated several thousand likes within the first day. 

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While the claim is based in reality, it gets many of the facts wrong. The claim’s assertion is a proposal by the Biden administration, not a decision set in stone. The Treasury cannot “declare” any changes to law, as that is a legislative power that belongs to Congress. And even if the proposal is adopted banks would not provide access to individual transactions, just the total amount flowing in and out of an account annually. 

USA TODAY reached out to InfoWars and the post’s creator for comment. 

Proposal by Treasury isn't official

A May document from the Department of the Treasury outlines a number of the Biden administration’s revenue proposals for the 2022 fiscal year. The proposal referred to in the claim suggests introducing more comprehensive financial account reporting to “improve tax compliance.”

The latest IRS estimates show a tax gap of $166 billion per year between the tax owed by businesses (not counting large corporations) and the tax actually paid. The document says requiring comprehensive reporting on money flowing in and out of accounts "will enhance the effectiveness of IRS enforcement measures and encourage voluntary compliance."

To achieve that, the Treasury proposed requiring financial institutions to annually report the total amount of money that went in and out of bank, loan and investment accounts if those accounts hold a value of at least $600, or if the total is at least $600 in a year. 

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That means that if the total debits (funds flowing out of the account) and credits (funds flowing into the account) equal at least $600 — including deposited paychecks or money transferred from finance apps like Cash App or PayPal — banks would have to report those figures to the IRS.

However, the banks would not report details on individual transactions, like how the money was spent, only the total amount of money flowing in and out of the applicable accounts.

Having that information will help the IRS flag under-reported income and target enforcement activities on tax evaders, the Treasury said. 

Chuck Marr, senior director of federal tax policy at the Center on Budget and Policy Priorities, told USA TODAY the threshold for tracking the funds is set low, at $600, to make sure the system can't be manipulated by the wealthy. 

"It's hundreds and hundreds of billions of dollars a year of taxes that are legally owed and not collected at the IRS which has been decimated with a decade of budget cuts, and that has led to a plummeting of audit, particularly of high income people, to the point now where some the highest capital audit rates in the country tend to be in Deep South poor, Black, rural counties, which is obviously upside down," Marr said. "...You want to make sure the threshold is low enough so these people cannot divide up their money into multiple accounts."

The proposed initiatives are aimed at making the tax system more equitable and efficient, said Natasha Sarin, the treasury's deputy assistant secretary for economic policy.

“Overall, the Administration’s compliance initiatives are guided by a singular objective – bringing about an end to a two-tiered tax system, where ordinary Americans comply with their tax obligations, but many high-end taxpayers do not,” Sarin said in a statement. 

The prospective reporting requirements are being considered as a revenue offset for Congress' $3.5 trillion reconciliation bill, as the Treasury estimates the system will generate $460 billion over a decade. The proposal last appeared in negotiations for the $1 trillion bipartisan infrastructure package that passed the Senate in August and is awaiting a vote in the House, the American Banker reported Sept. 8. 

Additionally, the Biden administration cannot “declare” any change to the current law as the InfoWars headline asserts, as that is a legislative power that belongs to Congress

If approved, the proposal would go into effect after Dec. 31, 2022.

Our rating:Partly false

We rate the claim that the Treasury Department 'declares' the IRS will monitor transactions in all U.S. bank accounts over $600 as PARTLY FALSE, based on our research. The Biden Administration has proposed monitoring accounts over $600, but the only figures reported to the government would be the total inflows and outflows for the year – not the size and nature of each transaction. And the Treasury can't simply "declare" this measure, it must be approved by Congress.

Our fact-check sources: 

Contributing: McKenzie Sadeghi

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