Do you know whether your bank reports transactions to the IRS? Banks report certain transactions, such as interest earned on the account, to the IRS. However, if you don’t report your bank account to the IRS or if you don’t pay your taxes, the IRS will never know about your account. It is also essential to report large cash purchases to the IRS, whether you make them with a check or $10,000 bill.
While the IRS has a legitimate reason to collect data, the pushback from the banking industry has been far from subtle. Regardless of the intentions behind the proposal, it aims to narrow the gap between the amount of money owed by businesses and the actual amount collected. This is a controversial initiative, and the American Bankers Association (ABA) has strongly opposed it. But while the IRS does need the resources it needs to collect more data, they should not break their relationship with customers.
A levy is a legal process in which the IRS levys the bank account. If the money is not released within 21 days, the bank will be obligated to pay the IRS the money. The levy does not apply to new deposits, though. In addition to levying the bank account, merchant processors also report to the IRS. They report the gross proceeds of credit card transactions to the IRS.