For snooping at bank accounts, I can understand how they picked $10k. It’s a nice round number. But how did they come up with $600 - why is that such a magic number? Actually, with inflation, shouldn’t it be even higher than 10k?
I bet it’s because $600 is the threshold for issuing 1099’s for independent contractors
I tend to agree with you.
Problem here is that IRS has nowhere enough people to conduct reviews. Someone last month said that a minimum of 50k more employees would have to be hired.
All of this would lead to several million people each month being tasked to come to an IRS investigator and explain what this $1,100 charge was for landscape support or beauty treatment. You’d have to hire a lawyer to accompany you....so thousands of lawyers would have additional work to defend people off stupid accusations.
Cascading effect on cost of living for regular people in the end. Would trigger a lot of people to walk into a bank and just take out $5k at a time, and only pay for services in cash.
I live in Spain and they recently passed a rule where anything you buy in a store that costs over 1000 Euros has to be paid for with a bank card or else they fine you. You can make as many separate 900 Euro purchases as you want in cash but pass that magic number and the business can refuse you. My guess is that it is to force people to keep more money in banks so it's easier for the government to seize in a crisis a la Cyprus.
$600 is the 1099 dollar amount that reporting starts for independent contractors. Anything under $600 the employer doesn’t report, but the contractor is required to report every dollar.
So, like you, if the transaction is over $600 and is income...it is already being tracked and reported.
So what is the purpose on this level? $600 is so low that it catches everything from rents, car payments, mortgage payments, car repairs, etc.
Simple, it leads to waiters/waitresses not reporting tips, independent contractors who structure payments under the $600 1099 requirement. This opens the door so the IRS can look and ask...hmmmm you only reported XX amount of income, but you were able to buy XXX, is there income you are failing to report. They then have the ability to go into your bank account and question all your deposits. If you are a good little citizen ...you are reporting ALL your income as under current law...even if it is under $600, you are required to report it to the IRS, even if the employer is not required too.
That’s the net they are casting. This net is not about the rich, it is about the freelancer, independent contractor, tipped service providers, nanny, housekeepers, etc. Democrats know there is a lot of underreporting in these job sectors and they are going after it. The reality is I don’t think anyone really knows how much is out there. But the $600 number is one anyone who is an Independent recognizes.
BLS says there are 14 million in the IC classification.
Tips come to nearly 42 billion a year reported income
How much is actually going unreported to the IRS?