A unanimous US Supreme Court decision has financial privacy watchdogs on high alert.
On May 18, 2023, the Court affirmed the IRS’s authority to summon anyone’s financial records — including the financial records of third parties, like business associates or relatives — If it aids in the collection of assessments and judgments rendered against people who owe unpaid federal taxes.
Opponents of the Court’s decision say this is troublesome because the power to access the private financial records of innocent relatives and associates who don’t owe the IRS a penny is…
An invasion of financial privacy
The Wall Street Journal Editorial Board agrees and writes, in a news report entitled “How the IRS Snoops on the Innocent,” “[IRS] agents shouldn’t get to Hoover up blameless people’s bank records with no real judicial review.”
And for some privacy advocates, the timing of the new IRS ruling is notable… as it was handed down just before the July 2023 launch of the Fed’s controversial new bank transfer system: FedNow.
As you may already know, FedNow is a government-developed payment platform designed to facilitate instant bank transfers of up to $500,000 for paychecks, bill payments and even government disbursements 24 hours a day, 365 days a year.
Of course, instant payment apps like PayPal, Zelle and Venmo already exist in the private sector
And these apps make it easy to send instant payments from app to app.
But moving money from an app into your bank account can still take a couple of days.
So, fixing this time-delay problem, especially for federal entitlements, is one of FedNow’s benefits, according to CNBC: “…government payments like those issued in the early days of the Covid pandemic would have been credited to accounts immediately rather than the days it took to reach most people.”
True. Earlier access to relief funds may have helped in many cases.
And faster bank transfers would be convenient for paying bills and receiving paychecks too.
But opponents say good-sounding benefits like these ignore potential privacy problems
Drew Johnson, director of Protect Internet Freedom and Senior Fellow at the Taxpayers Protection Alliance, warns:
“Under the Fed’s real-time payments system, the federal government could learn how much a mother paid for her son’s piano lesson, how friends chose to split a dinner bill, where an individual traveled using a rideshare app, how much a couple spent on concert tickets for their anniversary, and billions of other nuggets of information the government, frankly, has no right to know.”
Democratic presidential hopeful, Robert F. Kennedy Jr., agrees and pulls no punches in his scathing Tweet on April 5, 2023:
“The Fed just announced it will introduce its ’FedNow’ Central Bank Digital Currency (CBDC) in July. CBDCs grease the slippery slope to financial slavery and political tyranny,” says Kennedy.
Many dismiss his opinion as political fearmongering
And it’s important to note Kennedy mistakenly equates FedNow with the Fed’s proposed central bank digital currency. The former is a digital payment system, and the latter is a proposed form of money.
But while the distinction between the two is technically true…
Rolling out a CBDC will require a modernized digital payment system to support it, won’t it?
Business Insider thinks so and notes: “Some view the launch of the FedNow Service as a potential precursor to the launch of a CBDC.”
But whether the two systems are specifically designed to work together or not, presidential hopeful Ron DeSantis agrees with Kennedy and believes the coming changes to the US financial system aren’t about faster payments and modern money but “about surveillance and control.”
NBC News disagrees and says DeSantis and RFK Jr. have mischaracterized the Fed’s intentions:
“As the Federal Reserve looks to modernize banking, two potential 2024 presidential candidates have accused the central bank of seeking to use a proposed digital dollar to ‘control’ Americans’ finances, although Fed officials have committed to no such plans.”
Mischaracterizations or not, John Berlau of the Competitive Enterprise Institute, a non-profit libertarian think tank in Washington, DC, says privacy concerns still exist, noting the FedNow system “would also likely be vulnerable to hacking.”
With the banking industry’s current, slower payment systems, fraudulent wire transfers can often be caught and reversed. But with the Fed’s new instant-transfer system, a tech-savvy thief could theoretically transfer money out of the country to an international bank instantly… and *poof*, the money’s gone.
Even the Fed acknowledges the potential risks:
“You can’t avoid it — the potential for fraud exists with any type of payment process, and that includes instant payments. As instant payments become more popular around the world, fraud will continue to be a threat.”
This alone, for some financial privacy advocates, is enough to reconsider the impact of a fully digital US financial system.
As for the recent ruling granting the IRS warrant-free access to the private financial records of innocent and unaware individuals…
Supreme Court Justice John Roberts wrote:
“For as long as Americans have had to pay taxes, at least some have tried to avoid them. And for as long as Americans have avoided taxes, the Internal Revenue Service and its predecessors have tried to collect them. As an old joke goes: ‘I believe we should all pay taxes with a smile. I tried, but they wanted cash.’”
Did you know? Thanks to an IRS exception, you can shift a portion of your savings into a Gold IRA (Individual Retirement Account), tax-free and penalty-free.
To learn more about how gold can offer financial privacy and greater financial peace of mind, get a FREE copy of the 2023 Gold Information Kit. Or call 888-529-0399 to speak with a patient, caring Gold Specialist who can help you decide if a Gold IRA is right for you.
June 15, 2023
June 1, 2023
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