Saturday, October 23, 2021

Banks oppose Biden’s new proposal on IRS reporting

One trade group calls the effort ‘overreach’, saying it would make US banks a ‘police force for the IRS’.

The Washington-opposition is moving toward a new proposal aimed at curbing tax evasion that would be part of a $3.5 trillion reconciliation package being considered by Congress.

The proposal, which has been put forward by the Biden administration, requires banks and other financial institutions to report to the Internal Revenue Service (IRS) any deposits or withdrawals that exceed $600 annually from all business and personal accounts. is more.

The American Bankers Association (ABA), along with more than 40 business and financial groups, sent a letter to House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.) on September 17, objecting to the “ill” was expressed. Advised” reporting proposal.

“While the stated goal of this massive data collection is to uncover tax evasion by the wealthy, this proposal is not even remotely targeted for that purpose or that population,” the letter said.

“In addition to significant privacy concerns, this would create tremendous liability for all affected parties by requiring the collection of financial information for nearly every American, without a reasonable explanation of how the IRS will store, protect and protect this vast trove of personal financial information. will use.”

The Biden administration is pushing Democrats to include the proposal in a $3.5 trillion spending bill in an effort to address tax evasion primarily by the wealthy.

With the new reporting rule, “the rich can no longer hide what they’re making,” President Joe Biden said in a speech on the economy on Sept. 16.

“It’s not about raising their taxes,” Biden said. “It’s about the super-rich eventually starting to pay.”

According to the Treasury Department, the goal of the reporting arrangement is to close the tax gap, which is the difference between taxes owed to the government and taxes actually paid.

A report released by the Treasury in May said the new reporting rule “will help raise $460 billion over the next decade.”

According to Paul Mersky, group executive vice president of the Independent Community Bankers of America (ICBA), which represents about 5,000 community banks in the United States, nearly every banking transaction and even transfers between one’s accounts are aggregated and sent to the IRS. will be reported.

“It’s a dragnet, it’s a collection of data on a scale we’ve never seen before in the financial sector,” Mersky told The Epoch Times.

The ICBA is among financial groups that strongly oppose Biden’s proposal, calling it an “overreach” by the federal government.

Banks already report massive amounts of data to the IRS. According to the US Government Accountability Office report, the IRS received more than 3.5 billion information returns for the tax year 2018. A large number of these come from banks, the ABA says. These include reporting interest paid on bank accounts, dividend income, brokerage transactions, mortgage interest, and more.

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Under the Bank Secrecy Act, US financial institutions also report suspicious cash transactions to the government on all wire transfers over $10,000 as well as to prevent criminal activities such as money laundering.

“Banks are already reporting billions of information and you’re getting to the point where banks are becoming the police force for the IRS,” Mersky told The Epoch Times.

“I don’t think people, small business owners, are aware of this profiling that the IRS wants to put together,” he said. “So, it is basically an outline; They want to see your transactions and create a profile on you, and if they don’t like what they see, they can follow you.

Treasury Secretary Janet Yellen sent a letter last week to House Ways and Means Committee Chair Richard Neill (D-Mass.), asking Democrats to include a “sufficiently broad” reporting provision in the bill to help tax evaders. Don’t be able to structure the financials. To avoid this, eat “

It is unclear whether some versions of the motion would make it into the final bill, but the Ways and Means Committee dropped the administration’s proposal into law approved by the committee due to growing opposition.

Neil, however, indicated that the committee is in discussion with the administration on various proposals to increase reporting requirements.

According to Mersky, the provision in the budget reconciliation bill can be added back at any stage of the process, especially at the last minute. The bill only needs a simple majority to pass in the Senate.

“Our fear is that it is so hard that they wait until the last second to put it, but they are serious about keeping this offer,” he said.

An ICBA survey conducted by Morning Consult found that 67 percent of voters oppose the new IRS reporting proposal.

“The provision is a violation of Americans’ privacy rights and will be a heavy burden on community banks and credit unions struggling amid the pandemic,” John Berlau, a senior fellow at the Competitive Enterprise Institute, told The Epoch Times.

“The IRS already gets a lot of data on taxpayers through forms like 1099s, and doesn’t require immediate access to these small transactions after tax fraud,” he said.

According to the Treasury Department, Biden’s proposal is “integral to addressing theft.”

The Treasury report said the tax gap benefits the wealthy because their income comes primarily from “non-labor sources, where misreporting is common.”

“The tax gap was about $600 billion in 2019 and will increase to nearly $7 trillion during the next decade if left unaddressed.”

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Amell Akan is a White House economic policy reporter in Washington, DC, having previously worked in the financial sector as an investment banker at JPMorgan and an advisor at PwC. He graduated from Georgetown University with a master’s degree in business administration.

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This News Originally From – The Epoch Times

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