Proposed 1099-TellUsEverything

The administration released today its proposal for making IRS bigger and better than ever. When you come to Page 19 of 24, there is this “oh, by the way” note:

The new reporting regime would build from the framework of the Form 1099-INT reports that taxpayers already receive from financial institutions when they earn more than $10 in interest from a bank, brokerage, or other financial institution. Financial institutions would simply report additional data on the financial accounts of these existing information returns. Specifically, the annual return would report gross inflows and outflows on all business and personal accounts from financial institutions, including bank, loan, and investment accounts but carve out exceptions for accounts below a low de minimis gross flow threshold. [A footnote adds: “ The proposal preserves significant flexibility for the Secretary and the IRS to design the new reporting requirements in the way that will be most effective for tax
compliance efforts.”]

My thoughts:

1) That could be good way to catch tax cheats, and discourage others from trying in the first place.

2) It’s really not much of a burden for banks to report total deposits and total withdrawals for the year. And for many IRS audits, that’s the first thing they ask for anyway.

3) But Senator Grassley says this is a “big can of worms.” The worms I see are those that involve giving IRS so much data they don’t know what to do with it. It’s sort of like NSA surveillance of all phone calls.

4) Would we be the first country to do this? Can’t we get Lithuania to try it out for us, first?

https://home.treasury.gov/system/files/136/The-American-Families-Plan-Tax-Compliance-Agenda.pdf