House Financial Services Committee Members Call for Tax Reporting Proposal Hearing

Members of the House Financial Services Committee yesterday called for a hearing to discuss a controversial Biden administration tax proposal requiring banks to report information on annual gross inflows and outflows of customer financial accounts to the IRS.

In a letter to committee Chairwoman Rep. Maxine Waters (D-Calif.), Ranking Member Rep. Patrick McHenry (R-N.C.) and Rep. Blaine Luetkemeyer (R-Mo.) asked how the IRS planned to protect consumer information and what additional costs financial institutions might incur. The proposal—which was originally floated by the Biden administration—is intended to help shrink the so-called “tax gap.” The administration had proposed requiring financial institutions to report annual gross inflow and outflow on financial accounts of $600 or more, but earlier this month the threshold was raised to $10,000 and certain exemptions from reporting were suggested. Despite the change, lawmakers from both parties have continued to express serious concerns.

“Despite these reported proposals, Congress has not held a single hearing. Congress has yet to discuss any of these proposals or examine the impact they will have on financial institutions, consumer privacy and access to credit,” they wrote. “In fact, neither members of Congress nor the American people have yet to see legislative text of any of the above-mentioned proposals, further decreasing the transparency of this process.”

The American Bankers Association has aggressively opposed the proposal at any de minimis threshold and continues calling on bankers and their customers to redouble their advocacy efforts by calling their lawmakers and urging them to reject the proposal.