Hey Simplifiers,

There's been a lot of noise lately about the IRS using AI to monitor bank accounts.

Some of it's true. Some of it's overblown. And some of it is under active Congressional investigation.

So let me break down what's actually happening — based on what we know right now — and what it means for you.

Banks have been required to report cash deposits of $10,000 or more to the IRS since 1970. It's called a Currency Transaction Report (CTR), and it was designed to catch money laundering and tax evasion.

This isn't new. This isn't AI. This is just the law.

What triggers it:

What doesn't trigger it:

The important part: Depositing $10k isn't suspicious by itself. The bank files the report. The IRS reviews it. That's it.

What IS illegal: Breaking up a $10k+ deposit into smaller amounts to avoid the reporting threshold.

That's called structuring, and it's a federal crime — even if the money is completely legal and you planned to pay taxes on it.

The IRS assumes you're hiding something. Don't do it.

The IRS publicly announced in 2024 that they're using artificial intelligence to:

This is real.

They've said it openly. It's part of their modernization plan.

The goal (according to the IRS): Catch wealthy tax evaders who use complex structures to hide income, not go after average people making honest mistakes.

The concern (from critics): Once you build an AI system that can analyze financial data at scale, who's to say it won't be used more broadly?

That's the tension.

Here's where it gets murky.

In 2025, a Congressional investigation was launched after an undercover video surfaced of an IRS Criminal Investigations agent claiming the IRS has AI that can "see the amount in every American's bank account."

When asked if that's constitutional, the agent said: "I doubt it."

House Republicans (Jim Jordan, Harriet Hageman) sent letters to the Treasury demanding answers:

As of now, the Treasury hasn't fully confirmed or denied it.

So we're in this weird space where:

Bottom line: We don't know the full extent of what the IRS's AI can or can't access.

But we know they're using it. And we know they're looking for discrepancies.

You might've heard that Venmo, PayPal, and Cash App now report transactions over $600 to the IRS.

That was true... until it wasn't.

Here's the timeline:

Before 2022: Payment apps reported if you had $20,000+ in transactions AND 200+ transactions in a year.

2022-2024: The IRS tried to lower the threshold to $600 (total chaos, backlash, delays).

July 2025: Congress passed the One Big Beautiful Bill Act and restored the original $20,000 + 200 transaction threshold.

So as of 2026: Payment apps like Venmo, PayPal, Zelle, Cash App only report if you:

Exception: Some states (Maryland, Massachusetts, Vermont, Virginia, Illinois) have lower thresholds. Check your state rules.

What this means: If you're casually splitting rent, Venmo-ing friends for dinner, or selling a couch on Facebook Marketplace, you're not getting reported.

If you're running a business and getting paid via apps? Yeah, you'll get a 1099-K if you cross $20k.

1. Don't try to avoid the $10k reporting rule.

If you have cash to deposit, just deposit it. Let the bank file the CTR. It's not a red flag by itself.

Trying to "structure" deposits to avoid reporting? That's what gets you in trouble.

2. Keep records of everything.

Even if payment apps aren't reporting you to the IRS, YOU still have to report your income.

If you freelance, run a side hustle, or sell stuff online, track:

The IRS may not know about every Venmo payment you got. But if they audit you and the numbers don't match? That's a problem.

3. Don't panic about AI.

The IRS has always cross-checked your tax return against third-party data (W-2s, 1099s, bank reports).

AI just makes that process faster and more accurate.

If you're filing honestly and reporting your income, you're fine.

If you're fudging numbers or "forgetting" to report side income? That's riskier now than it used to be.

4. Stay informed.

This is an evolving situation.

The Congressional investigation into IRS AI monitoring is ongoing. Privacy advocates, civil liberties groups, and lawmakers are watching closely.

If new information comes out, I'll update you.

The IRS isn't after you for splitting the electric bill with your roommate.

They're after:

But the tools they're building to catch the big fish? Those same tools can see the little fish too.

So the best move is simple:

Report your income. Keep your records. File accurately.

Because whether or not the IRS can see your bank account, they can definitely see when your reported income doesn't match the data they have.

And that's the audit trigger that matters most.

Pull your 2025 tax documents.

If you:

Make sure your tax return matches what the IRS will see from third-party reporting.

If you're missing records, now's the time to reconstruct them — not in April when you're rushing to file.

With care,
C
Founder of The Simple Adult 🩶

P.S. — If you're genuinely unsure whether you need to report something, talk to a tax professional. The cost of a consultation ($50-300) is way cheaper than an audit.