The Biden administration today endorsed raising the de minimis threshold for its controversial IRS reporting proposal from $600 to $10,000. Financial institutions would be required to report information on gross inflows and outflows for all accounts above that $10,000 threshold. The administration also signaled that it would include carve-outs for “wage and salary earners and federal program beneficiaries,” although details of how flow calculations would work remained unclear.
ABA has aggressively opposed the proposal at any de minimis threshold, and ABA President and CEO Rob Nichols today emphasized that the updated proposal would still have serious implications for taxpayers. “Even with the modifications announced today, this proposal still goes too far by forcing financial institutions to share with the IRS private financial data from millions of customers not suspected of cheating on their taxes. The exclusion of payroll and federal program beneficiaries does not address millions of other taxpayers who would be impacted by the proposal,” Nichols said. “Not every non-wage worker is a millionaire. How about self-employed hair stylists, convenience store owners and farmers just to name a few? If enacted, this new proposal would still raise the same privacy concerns, increase tax preparation costs for individuals and small businesses, and create significant operational challenges, particularly for community banks.”
Nichols added that “we firmly believe that everyone should honor their tax obligations, but this blunt instrument is not the right tool to solve this problem. We urge lawmakers on both sides of the aisle to listen to their constituents and oppose any efforts to advance this ill-advised reporting regime.”
GOP lawmakers slammed the proposal in a press conference earlier today. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) called it “totally unnecessary,” and emphasized that average Americans have well over $10,000 flow through their bank account annually. “The average American will be picked up by this plan,” Crapo warned, including “virtually every small business. . . . The scope of the IRS’ ability to dive into these accounts will be the biggest violation of individual privacy that I think this country has ever seen.” Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) added that the proposal is “a breathtakingly terrible idea. . . . It should never see the light of day.”
ABA is calling on all bankers to urgently redouble their advocacy efforts to oppose this proposals by calling lawmakers to express opposition. Resources are available at SecureAmericanOpportunity.com for bankers and their customers to help them craft their messages to lawmakers.