As the House considers the Biden administration’s social spending bill, the American Bankers Association and 51 state associations today told house lawmakers that requiring banks to report information to the IRS on gross inflows and outflows on customer accounts is “bad tax policy” and urged them not to include such a provision in the bill, regardless of the reporting threshold. The idea—which was proposed by the administration as a way to shrink the so-called “tax gap”—originally floated a de minimis threshold of $600, though lawmakers are contemplating the possibility of raising the threshold.
However, the associations emphasized that “the impact on average Americans and the safety and privacy of their financial information would not be mitigated by raising the reporting threshold to $10,000 or even $100,000. . . . In the end, whether it is average workers or self-employed citizens virtually all Americans will be subject to this new reporting.”
The groups also pointed out that if enacted, this provision would “create the implicit presumption that all taxpayers are not honoring their tax obligations,” in addition to generating an “unprecedented” amount of data “most of which will be irrelevant to the calculation of taxpayers’ taxable income, being transmitted and stored in an uncertain environment, with significant cost to taxpayers and financial institutions.”
ABA urges banks and their customers to contact their representatives to ensure the provision stays out of the bill in the days ahead. Bankers can find communications tools to help engage bank customers on SecureAmericanOpportunity.com.
