Should tax evaders with undisclosed income pay their fair share of federal income taxes? This is what is at stake in the Congressional Tax Compliance proposal that would attract tax evaders by prosecuting bank account transfers. The proposal has angered industry players and fueled misinformation campaigns. With this in mind, the Treasury Department today released a fact sheet detailing a revised proposal to detect tax fraud for wealthy individuals, this time setting the bank account threshold from $ 600 to $ 10,000, with an exemption for wage earners.

Wage earners pay virtually all federal income taxes due on their salaries reported by their employer to the IRS on a Form W-2 or a Form 1099. The same applies to people who receive federal benefits such as social insurance or unemployment benefits.

In contrast, taxpayers who generate income in ways that are difficult to track have much lower compliance rates because there is no third party source to report income to the tax authorities.

The premise of the proposal is to take action against tax evaders who do not pay income tax on all their income. These tax evaders add to the huge tax gap and make law-abiding taxpayers feel like fools. The Treasury Department estimates that the cost of tax evasion among the top percent of taxpayers exceeds $ 160 billion a year. The new proposal for bank account reporting will collect $ 700 billion in additional taxes over the next 10 years – and around $ 1.6 trillion over the next decade, according to Treasury Department estimates.

Along with the fact sheet, Treasury Secretary Janet Yellen made a statement on the need to fill the tax loophole: “Under the current system, American workers pay virtually all of their tax bills, while many top earners avoid paying billions in taxes they owe by taking advantage of the Systems. At the heart of the problem is a mismatch in the way income types are reported to the IRS: opaque sources of income often avoid scrutiny, while wages and government benefits are usually almost completely adhered to. This two-tier tax system is unfair and robs the country of the resources to finance its core priorities. ”

The American Bankers Association has denied that the updated tax reporting proposal still goes too far. “Even with the changes announced today, this proposal still goes too far by forcing financial institutions to share private financial information with the IRS on millions of customers who are not suspected of fraudulent taxes.” Said ABA President Rob Nichols in a statement today.

So what new information would the Internal Revenue Service actually receive? The revised proposal would require banks and other financial institutions to provide the IRS with annual information on taxpayers’ balances under certain prescribed circumstances. Note: The IRS is already receiving informational reports for any account with interest income of $ 10 or more.

Under the revised proposal, the IRS would get two new numbers: the total amount of funds deposited into the account and the total amount withdrawn over the course of a year for accounts with inflows and outflows of $ 10,000 or more. That’s an increase of $ 600 in the original proposal. The proposal is one of the sources of revenue in the major social policy bill being debated in Congress. The idea is to reach into the pockets of tax fraudsters who owe – but don’t pay – taxes to fund childcare, preschool, community college, and paid vacation programs.