In a letter to Sen. Elizabeth Warren (D-Mass.) IRS Commissioner Charles Rettig said requiring banks to provide insight into customers’ transaction history could help the federal government recoup missed taxes, CNBC reported on Thursday (Sept. 2).
As part of President Biden’s American Families Plan, banks would be mandated to report on customers’ withdrawals and deposits, according to the report. The measure would serve to plug the hole between taxes paid and what is legally owed, per the news outlet.
The rate of taxes paid correctly and on time is pegged at approximately 82% to 84%. Rettig said that each 1 percent increase in tax compliance equated to roughly $30 billion annually in federal annual revenues, which would net up to $540 billion at 100 percent compliance.
In addition to intentional or accidental tax evasion stemming from self-reporting of banking transactions, Rettig said previously that cryptocurrencies using non-fungible tokens (NFTs) are another area ripe for tax evasion, per an earlier PYMNTS report. Rettig said the U.S. fails to collect approximately $1 trillion in annual taxes because of the new popularity of crypto, noting that cryptos are challenging for the agency to track and tax.
Rettig said in June that the IRS needed congressional authority to regulate cryptocurrency.
Part of the challenge in ensuring taxpayers pay what is owed stems from budget cuts within the IRS which have caused the number of staff to shrink, according to CNBC. Yet the demand for IRS services and support continues to surge. In 2021, more than 199 million calls were made to the IRS, as compared to 42 million calls in 2018, 40 million calls in 2019 and 55 million calls in 2020, according to the report.