An official of the Internal Revenue Service is currently encouraging Congress to mandate that financial services firms disclose to the government what investors pay for their stocks and mutual funds, according to The Wall Street Journal.
Under the new proposal, not only would firms have to disclose cost data for customers, they would also have to disclose this information to the IRS when a stock or a mutual fund is sold for a taxable account, the Journal reports.
IRS officials believe that many people embellish their costs to the IRS and cheat the government of billions of dollars in tax revenue.
Making the disclosure of cost data mandatory would benefit taxpayers, as it would make things easier in tracking costs for millions of honest people, as per IRS national taxpayer advocate, Nina Olsen.
Professors Joseph M. Dodge and Jay A. Soled estimate that the government loses approximately $60 billion a year due to overstatements of costs.
"It can be mind numbing," said Thomas Ochsenschlager, vice president of taxation at the American Institute of Certified Public Accountants. "You can end up with pages and pages of records trying to figure out the basis. If the truth be told, more people probably cheat inadvertently because they just haven't kept adequate records and don't have any idea what their tax basis is."
It is too soon to be able to tell whether this proposal will be approved. However, it may attract support in congress as it is geared towards stopping cheating and could really hoist up revenue.
Treasury Department officials are currently reviewing this proposal