Could The Biden Tax Plan Make Increased Spending Juice Not Worth The Squeeze?
The Wall Street Journal posted an article yesterday (thanks to Derrick from Travel on Point(s) for sending it to me) about some alarming details in the Biden tax plan. It should perk the ears of anyone that takes advantage of increased spending avenues. Even though there is now precedent that many forms of increased spending are not taxable this proposal could sure add another layer of scrutiny and hassle to the process. Let’s take a look at what I am talking about.
Biden Tax Plan Details
As a part of Biden’s $1.8 trillion American Families Plan there is a proposal to ratchet up scrutiny on bank account transactions. The goal is to have the IRS locate unreported or misreported income. Here is an excerpt from The Wall Street Journal article:
The proposal would require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirement would also extend to peer-to-peer payment services such as Venmo but wouldn’t require individuals and businesses to report any additional information to the government, according to people familiar with the plan. Financial institutions already must report interest, dividend and investment income, and the IRS can get bank information during audits.
Why This Scares Me For Miles & Points
While this is obviously aimed at wealthy business owners it could trickle down to small business owners as well. Once pandora’s box is opened you never know how far this slippery slope could go. While buying gift cards to turn into money orders may not be taxable, per the case earlier this year, buying and selling merchandise or 3rd party gift cards is. And if you use the same bank account for both transactions it could look really strange to anyone getting that data.
That would look an awful lot like unreported income even if it isn’t. Do you keep good enough documentation should you get audited because of the extra information being sent out by the bank? Would that potential hassle reduce your desire to chase the miles and points in the first place?
Those are potential issues I could see coming if this is passed. It would give me second thoughts on pursuing some of the things we do even if we are in the right. I don’t know if it would ever make it to our level but if it did I don’t know if the juice would be worth the squeeze anymore.
While this has a long way to go before it can become a reality it still gives me some pause. I imagine the banks will use all of their lobbying power and might to kill this because of the increased burden and cost that would fall on them. There are also privacy issues to consider etc. The cost required to implement this program would be another factor, as well as, if the IRS could even pull it off.
While it is aimed at wealthy business owners for the time being who knows where it would go from there. It is something we will want to stay on top of though going forward.
Let me know your thoughts below. Does this concern you? Would it change the way you do things?