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1 1 (October 20, 2021)

handle is hein.crs/goveerj0001 and id is 1 raw text is: Congressional a Research Service informing the egislative debate since 1914___________________ The Proposed IRS Bank Reporting Requirement: Frequently Asked Questions Updated October 20, 2021 A proposal to require financial institutions to report information to the Internal Revenue Service (IRS) on personal and business accounts has garnered significant publicity and congressional attention. The proposal is commonly referenced as the new IRS bank reporting requirement. This Insight addresses a number of frequently asked questions about the proposal. What is the proposal and where did it come from? The proposal referenced in media reports was originally included in the President's FY2022 budget request and is described as being part of a comprehensive financial account information reporting regime. The General Explanations of the Administration's Fiscal Year 2022 Revenue Proposals, which accompanies the President's budget request, states that Financial institutions would report data on financial accounts in an information return. The annual return will report gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner. This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600. A recent Treasury Department press release states that the Administration has modified its proposal by increasing the $600 gross flow threshold to $10,000. Additionally, Treasury's press release states that under the modified proposal, wage and salary earnings, as well as government benefits (e.g., unemployment compensation) deposited into accounts, would not count toward the $10,000 threshold. The press release also elaborated on how the proposal would work Financial institutions and banks will add just two additional numbers to the information that they already supply to taxpayers and the IRS: the total amount of funds deposited into the account and the total amount withdrawn over the course of a year. The scope of this information sharing is extremely limited. Banks will not share with the IRS any information to track individual transactions under this proposal, and the IRS will have no ability to track individual transactions. Congressional Research Service https://crsreports.congress.gov IN11772 CRS INSIGHT Prepared for Members and Committees of Congress

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