(June 4, 2021) All deposit, loan and investment accounts at financial institutions (including credit unions) for persons and businesses would be subject to a $600 “de minimus” gross inflow reporting threshold, according to the 2022 budget submitted late last week by the Biden Administration.
Under the provision – which is designed to increase taxpayer compliance with income reporting – Treasury would have broad power to issue regulations, which would take effect beginning in the 2023 tax year. The provision was included in the so-called “Green Book,” which outlines the specific tax provisions that the administration seeks to enact along with its budget.
The provision requires that reporting include a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner. Payment settlement entities would also be required to collect Taxpayer Identification Numbers (TINs) and file a revised IRS Form 1099-K expanded to all payee accounts (except de minimis amounts), which would report not only gross receipts but also gross purchases.
The entire budget proposal must be considered – and passed – by Congress before it takes effect. The budget proposal has a long way to go before a final version, as amended by the House and Senate, becomes law.