The IRS probably already knows about many of your financial accounts, and the IRS can get information on how much is there. But, in reality, the IRS rarely digs deeper into your bank and financial accounts unless you’re being audited or the IRS is collecting back taxes from you.

The IRS has loads of information on taxpayers. Most of it comes from three sources:

  1. Your filed tax returns
  2. Information statements about you (Forms W-2, 1099, etc) under your Social Security Number
  3. Data from third parties, like the Social Security Administration

Because of information statements, the IRS probably already knows about your financial accounts

Here are some examples:

  • When you receive more than $10 of interest in a bank account during the year, the bank has to report that interest to the IRS on Form 1099-INT.
  • If you have investment accounts, the IRS can see them in dividend and stock sales reportings through Forms 1099-DIV and 1099-B.
  • If you have an IRA, the IRS will know about it through Form 5498.
  • If you get paid through a merchant account (like PayPal or VISA) and have enough transactions, the IRS will see the amount of these transactions on Form 1099-K.

How to find out what the IRS has about your financial accounts

To see IRS information about your financial accounts, order your wage and income transcript for the year from the IRS. In late July, this transcript will show most of your information statements that are reported to the IRS.

What happens if the IRS wants more details about your bank accounts

In some situations, the IRS will want to know about exact transactions in your bank accounts, or about other accounts that don’t show up on your tax returns or information statements. Most of the time, these inquiries would come from a specific IRS employee during an audit ( revenue agent ) or a back tax issue ( revenue officer ).

  • The revenue agent would be looking to see if you reported all your income. For example, if the revenue agent auditing you sees unexplained cash deposits in your account, he or she may suspect that you didn’t report all your income on your return.
  • In a back tax issue, the IRS revenue officer would be looking at your financial information for assets that you could use to pay off your tax bill or file a late tax return.

The first thing the IRS would do is ask you for these records. If you refuse or don’t provide them by the IRS deadline, the IRS can summons the records directly from your bank or financial institution.

You can contest the summons (called “quashing” the summons) if you can show that the summons isn’t for a legitimate purpose or that the information is irrelevant to the purpose. You can also contest the summons on the grounds that the IRS already has the information.

If you’ve gotten a summons, it’s a good idea to get professional guidance on what to do

If you’re in this situation, it’s likely that you’re entangled in a serious tax issue that requires a tax professional’s help.


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At Nugent & Associates, we're not just number crunchers. Our people bring decades of invaluable certified public accounting and financial and tax expertise to you – offering tax and financial strategies to individuals such as yourself. If you have any questions or concerns about your own tax, financial or investment matters, please do not hesitate to contact us.

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Contact Nugent & Associates today. We don't charge for phone calls. You may just find you found an ally in your quest to have a great financial future.

After all, at Nugent & Associates, we succeed when you succeed!


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