Does the IRS Monitor Bank Accounts?

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The Internal Revenue Service does not monitor bank accounts. However, the IRS can easily gain access to your bank account information under certain circumstances. The IRS expects you to honestly and accurately disclose your bank account information when necessary. If you choose not to provide the information, the IRS can force you to comply. Attempts to deceive the IRS can carry heavy fines and even a potential jail sentence, depending on the severity.

Tips

  • Depending upon the size of your deposits and transactions, your preferred banking institution may be required to report your activity to the government. If this occurs, the IRS may choose to review your account for auditing purposes.

Analyzing Suspicious Deposits

Reviewing Foreign Accounts

Conducting Official Audits

An IRS audit is an official investigation of all of your accounts, including your bank accounts. Auditors are trained to identify fraud, including attempts to conceal bank accounts and income. If you are audited, the auditor will compare the income you reported on your tax return to your bank account statements to ensure your taxes are assessed accurately. Unreported income can result in a large tax bill along with interest and penalties. While a simple error is understandable, intentional fraud carries serious consequences.

Uncovering Other Accounts

The IRS has various ways to locate your bank account information. Since you need a Social Security number to open a bank account, the IRS can track bank accounts associated with your name and number. When you request your tax refund via direct deposit, the IRS maintains the bank account information in their database. They also gather information from financial audits you may have completed in the past. If you earned more than $10 in interest for the year on a bank account or certificate of deposit, the financial institution also sends the IRS a copy of the 1099 Interest Statement you receive.