Letter Re: Largest Bank’s War on Cash

I note that under Chase’s new rules, cash cannot be used to make a payment on a loan account. So payments on debt have to come through a deposit account. The Internal Revenue Service regards all deposits to deposit accounts as income. You have to offer proof that a given deposit is a transfer of funds from income previously recorded or proceeds from a loan to have the deposit excluded from income. Undocumented, it is known as phantom income to small business owners, as they are forced to pay tax on deposits they cannot prove to be from non-income sources. It is very important to keep good records.

Since debt can only be reduced by income and income is taxed, they are eliminating anyone’s ability TO avoid tax by engaging in cash transactions to earn money in order to pay off debt. They are making sure that the government can collect all the tax possible to pay interest on all those bonds they have bought. This is a necessary development that must precede dramatic increases in tax rates. As interest rates rise, taxes will have to go up to cover debt service and all those other obligations.

I know that I will have to pay tax on income in my journey to being debt free. It is important to use the rules to your favor using a combination of passive entities and active entities to achieve your goals. – R.V.