Treasury Secretary Janet Yellen this week called on House Ways and Means Committee Chairman Richard Neal (D-Mass.) to include in the reconciliation package the Biden administration’s controversial provision that would require financial institutions to report information to the IRS on gross inflows and outflows on customer accounts above a de minimis level of $600—a provision strongly opposed by the American Bankers Association.
In a letter to Rep. Neal, Yellen claimed that the proposals “were designed to ensure that there will be no increase in taxpayer burden associated with this regime” and that “for already compliant taxpayers, the only effect is a distinct benefit—a lowered likelihood of costly and burdensome audits.” In addition, the letter claimed that the provision is “designed to minimize costs for financial institutions.” However, ABA has raised significant concerns that the new requirements could lead to higher tax preparation costs and concerns for taxpayers, could also undermine public trust in banks and hinder progress toward promoting financial inclusion. Importantly, ABA also emphasized that the proposal would be a significant system and process challenge for banks with material costs and disruption.
While the provision was not included in the earliest stages of the bill’s consideration, Secretary Yellen’s letter makes clear that the provision is a top administration priority. ABA is urging banks and their customers to continue their grassroots efforts to ensure that this provision stays out of any future versions of the bill. To help engage bank customers on this issue, ABA has created sample language for customer communications and social media posts banks can use. The association continues to closely monitor developments related to the bill, and will provide additional updates to members as needed.
