Fact check: Does Biden want the IRS to 'monitor every single' bank transaction?

From splitting restaurant checks to paying rent to roommates, the words "I’ll Venmo you" have become increasingly commonplace.

But some of the plan’s details have become muddled on the internet. One variation of the rumor warns that a Biden proposal will allow the government to monitor every bank account transaction or cash app withdrawal and deposit.

Conservative commentator Candace Owens repeated this in a tweet, writing that "the Biden administration is attempting to empower the IRS to monitor every single withdrawal, deposit, and transaction you make from your personal banking accounts, PayPal, Venmo, etc.."

But this isn’t right.

The Treasury proposal calls for financial institutions, including cash apps, to track total deposits and withdrawals to find major tax reporting discrepancies.

Banks would report only the aggregate inflows and outflows that exceed $600, not details on individual transactions.

"Banks already report directly to the IRS the interest that they pay on accounts when it exceeds $10," Treasury Secretary Janet Yellen said in a Sept. 28 Senate hearing. "And this is not a proposal to provide detailed transaction-level data by banks to the IRS."

The Treasury Department clarified further in an emailed statement to PolitiFact:

"The Administration’s bank reporting proposal does not track transactions in your bank account, or payments you make on Venmo, Paypal, or with any other payment service provider. The proposal adds two additional boxes to existing information reports that banks send to the IRS already. Specifically, total deposits and total withdrawals in a year."

The government says that having summary information about annual aggregate deposits and withdrawals (the Treasury Department describes them as inflows and outflows) will help flag when high-income people under-report their income and under-pay their tax obligations.

"When you have a taxpayer who reports $10K of income but has $10M of deposits, that is a taxpayer the IRS can prioritize looking into," the department wrote in its email.

Much of the discussion about cash apps like PayPal and Venmo come from a different, already passed proposal.

The American Rescue Plan Act, passed by Congress on March 11, includes a new rule that applies to business transactions over $600, which are often paid through cash apps like Venmo, PayPal and Zelle. This applies to third-party apps and credit card issuers, but not traditional bank accounts, experts said.

"These information reports by PayPal, Venmo and other third-party networks have been on the books for several years, but the threshold for reporting was very high — $20,000 transactions with a 200-transaction minimum," said Steven Rosenthal, senior fellow at Urban-Brookings Tax Policy Center. "It’s just the tracking information on tax rules that have changed."

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Those who use cash apps to avoid traditional forms of income reporting will be most affected by the change, not people who use these platforms for personal, day-to-day transactions.

Identifying income through apps like Venmo has become a difficult and opaque process for the government. Businesses and independent sellers who use cash apps have largely been able to fly under the radar with regard to how much income they really bring in each year.

While cash app users who have received more than $600 via the platform might receive a 1099-K form, this doesn’t mean it needs to be filled out or reported — unless it’s business income.

For instance, if you sell a piece of furniture for $800 and the buyer pays you on Venmo, it’s not considered taxable income as long as you can prove with a receipt that you originally paid more than $800 for it.

"I don’t expect to receive a 1099-K on grocery transactions," Rosenthal said, "and I think we are still waiting on Venmo and the like to determine the standards of how they will sort through what will need to be reported. But either way, I’m not afraid because it’s not taxable income."

Asked about her claim, Owens said she stands by her tweet and was unswayed by the Treasury Department’s statement that it is not seeking detailed information about individual transactions.

"(They) are looking to expand reporting procedures beyond the current scope," Owens wrote in an email to PolitiFact. She said they want "the institutions to report to them totals — inclusive of those which fall outside of their current purview (Venmo, PayPal, etc). This is a major expansion as typically, the income reported includes what the IRS already has access to — beyond that falls onto the individual taxpayers to self-report."

Owens tweeted that the Biden administration "is attempting to empower the IRS to monitor every single withdrawal, deposit, and transaction you make from your personal banking accounts, PayPal, Venmo, etc.."

This is misleading. The American Rescue Plan Act has a provision that will require cash apps like Venmo, PayPal and Zelle to file information reports with both the merchants who use their platforms and the IRS specifically for business transactions that exceed $600. This applies to third-party apps and credit card issuers, not traditional bank accounts.

The Biden administration proposal loops traditional bank accounts in, both business and personal. If implemented as is, the change would require financial institutions and cash apps to report to the IRS aggregate inflow and outflow from most bank, loan and investment accounts that exceed $600. But it would not monitor or share details on individual transactions, as Owens’ statement suggests.

We rate this Mostly False.