The American Bankers Association today joined a broad coalition of business trade groups in a letter to House and Senate leaders urging them to reject a Biden administration proposal to require financial institutions to report information about gross inflows and outflows of all accounts above a de minimis threshold of $600. The proposal was originally floated as a way to shrink the so-called “tax gap.”
The trade groups emphasized, however, that regardless of the threshold, the proposal would create significant privacy concerns, increase tax preparation costs for both individuals and small businesses and create operational challenges for financial institutions.
“Lawmakers must fully understand the breadth of taxpayers who would be receiving a new form from their financial institution—almost every American who has a bank or credit union account and has gross inflow and outflow of at least $600,” the groups wrote. “While recent proposals suggest that increasing the de minimis threshold to $10,000 is less objectionable, this is a flawed assumption and will not significantly reduce the scale of this new IRS program.” Along with the letter, the groups also included a supplemental document refuting some of the commonly made—and erroneous—claims being made about how the provision would affect taxpayers and financial institutions.
As Congress moves closer toward finalizing a budget reconciliation package, ABA continues to urge bankers and their customers to contact their members of Congress to express their opposition to including the tax reporting proposal in the bill.