Fact Check By: Accounting Lecturer and CPA Samuel Handwerger, University of Maryland, Robert H. Smith School of Business
Truthfulness: Mostly False
The Democrats want to allow the IRS to peer into the bank account of every working American. That’s socialism.Claim Publisher and Date: Sen. Tim Scott on 2021-10-26
The Biden administration wants to give the IRS more tools to spot people who might be cheating on their taxes. Accounting Lecturer and CPA Samuel Handwerger at the University of Maryland’s Robert H. Smith School of Business fact checks the claim that the IRS will "peer into the bank account of every working American" by Republican Senator Tim Scott of South Carolina.
Based on the last version of the Biden plan, Tim Scott's comments were not entirely accurate. The only accounts that would be subject to the reporting requirement would be where the total deposits exceed $10,000 after taking out of the equation W-2 wages and government benefits, e.g., social security payments. Given the theory of trying to tighten the noose on tax cheats, this makes sense because W-2 wages and government benefits are already being reported and perhaps subjected to withholding taxes, as in the case of W-2 wages. Those of us in the tax world well understand the motivation behind the Biden reporting expansion. Once you get a look at the earned income category outside of W-2's it is like the wild west. We're talking specifically about the independent contractor category. This is where a lot of non-compliance happens.