New Forms Required for Pass-Throughs with International Activities or Owners for 2021 Returns
Return Preparer Legislation—Hopefully Not Déjà Vu

Proposal for Financial Institution Reporting

By Tom Ochsenschlager, CPA, J.D.

President Biden has proposed several federal revenue increases as a means to fund the proposed $1.8 trillion American Families Plan. Among these proposals is requiring financial institutions to provide the IRS with taxpayers’ account balances. The argument for this proposal is based on the IRS estimate that as much as 55% of business income is underreported or misreported.

Those supporting the proposal argue that, whereas most taxpayers’ income can be traced to forms such as W-2s and 1099s, underreporting of income for self-employed and small business taxpayers is difficult for the IRS to enforce. The Administration believes requiring financial institutions to report account balances would give the IRS the capability to identify circumstances where deposits or withdrawals do not coincide with amounts reported on a tax return and, accordingly, would significantly reduce the underreporting.

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name is required. Email address will not be displayed with the comment.)