Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Biden’s IRS Crackdown Proposal Targets Rich Hiding Income

Biden’s IRS Crackdown Proposal Targets Rich Hiding Income

The U.S. Treasury Department estimated that wealthy taxpayers as a group are hiding billions of dollars of income, a conclusion that aims to bolster the Biden administration’s call for Congress to approve expanded IRS funding and broad new financial-transaction reporting requirements.

The department detailed in a report Thursday the administration’s proposed measures to raise $700 billion in additional revenue over a decade through Internal Revenue Service enforcement. The release follows criticism from Republican lawmakers and tax analysts that the estimate is unrealistically high.

The enforcement plan is a central component of President Joe Biden’s quest to fund his roughly $4 trillion in long-term economic proposals. The administration called for banks and cryptocurrency exchanges to report transactions to the Internal Revenue Service, which would also get new auditors and an upgraded information-technology system.

“The IRS will be able to deploy this new information to better target enforcement activities, increasing scrutiny of wealthy evaders and decreasing the likelihood that fully compliant taxpayers will be subject to costly audits,” the Treasury said of the proposed reporting requirements.

Income earned from small businesses, rental properties and other so-called pass-through entities is increasingly becoming a target for the Biden team as it looks for ways to close the tax gap — the difference between taxes owed and those paid, which is projected to reach $7 trillion in the next decade.

Account Flows


While both Democrats and Republicans have backed stronger enforcement as a means of paying for long-term economic development programs, challenges have emerged. GOP lawmakers have warned against government overreach — especially with regard to account-flow reporting — and congressional rules could limit the ability of Democrats to apply the Treasury’s estimate to funding for Biden’s spending plans.

The Treasury’s plan includes requiring banks and financial institutions to report account flows — information that the IRS currently doesn’t have. The idea is to make pass-through income more like wages, which employers must report to the agency.

Taxpayers report only 45% of their income when the IRS doesn’t have visibility into their earnings, the Treasury estimated. That compares with a 99% compliance rate for wages where employers are required to report to the IRS, the Treasury said.

IRS Estimates


“Sophisticated taxpayers and those who advise them are well-positioned to shield unpaid taxes,” the Treasury said. Examples include pass-through income, which “can be challenging to attribute to its ultimate owner,” and capital income flowing to offshore accounts, the Treasury said.

The gap between taxes owed and those paid for partnership, S-corporation and proprietorship income is “estimated at around $200 billion annually with the net misreporting percentage for certain income categories exceeding 50%,” the Treasury said.

Incomes from partnerships are a particular challenge, the Treasury said. Those have surged as a share of total income to more than 35% from less than 5% in 1990. More than 4.2 million partnership returns were filed in 2018 — more than double the number of corporate returns — but the IRS audited only 140 of them, the Treasury said.

Also important has been the increasing instance of high-income Americans who simply don’t file a tax return, the Treasury said. There were nearly 900,000 high-income nonfilers between 2014 and 2016, the Treasury found, and 44% of those cases were never investigated. Some 300 of the “most egregious evaders cost the federal government $10 billion in unpaid tax liabilities,” the report said.

New Requirements


New account-reporting requirements are designed to help address the challenge.

“The annual return would report gross inflows and outflows on all business and personal accounts from financial institutions, including bank, loan and investment accounts,” the report said. “The reporting regime would also cover foreign financial institutions and crypto asset exchanges and custodians.”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
×