A group of Republican senators has urged Democrats to drop a proposal that would force banks to report data on account inflows and outflows to the Internal Revenue Service.
Every Republican member of the Senate Banking Committee has called on Majority Leader Chuck Schumer (D-NY) to abandon the idea, in a letter signed by 25 senators led by John Thune of South Dakota, Mike Crapo of Idaho and Pat Toomey of Pennsylvania.
The Biden administration has proposed requiring financial institutions to report to the IRS once a year on the total amount of money that has gone into and out of bank, loan and investment accounts that hold at least $600, or have inflow and outflow of at least $600.
Supporters of the measure say it would help the IRS to identify high-income earners who may be shielding income from taxation.
The proposal could be added to the Democrats' $3.5 trillion spending bill.
Democrats in Congress are already considering changing the administration's proposal to cover only accounts that hold at least $10,000 and to exempt payments from payroll processors.
The Republican senators called the measure an "unprecedented proposal to expand the reporting of the private, confidential financial data of law-abiding Americans."
In the letter to Schumer, they wrote: "This proposal represents a radical departure from existing reporting requirements associated with national security and actual taxable events.
"Placing more requirements on financial institutions would not only adversely affect these institutions and their customers—who ultimately pay the price for compliance costs—but it would also inundate the IRS with layers of new paperwork and taxpayer data that is either redundant or irrelevant to improving federal tax compliance, as account inflows and outflows are not taxable events."
The letter went on: "Simply flooding the IRS with more data and burdening taxpayers, financial institutions, and already overwhelmed IRS service centers with more paperwork is of questionable value, especially when the IRS does not effectively use data already in its possession."
The GOP senators' letter was supported by the American Bankers Association, Independent Community Bankers of America and Credit Union National Association.
Rob Nichols, president and CEO of the American Bankers Association, said the plan would "force banks to develop a costly new system to provide private financial data on almost every taxpayer to the IRS, not just those suspected of cheating on their taxes.
"It's not clear the IRS could even process and protect all that information. Perhaps most troubling of all, it risks driving people away from the banking system and all the economic benefits that come from having a bank account. We urge Congress to reject this bad idea."
Natasha Sarin, deputy assistant secretary for economic policy at the Treasury Department, said in a statement on September 7 that the administration's proposals were designed to "create a more equitable, efficient tax system."
Uncommon Knowledge
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About the writer
Darragh Roche is a U.S. News Reporter based in Limerick, Ireland. His focus is reporting on U.S. politics. He has ... Read more
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