An article on the Treasury Department blog on Thursday aims to dispel “misinformation” surrounding a hotly debated proposal in Congress to require banks to report inflows and outflows on accounts holding more than $ 600 to the IRS.
“Opponents have raised the pernicious myth that banks will have to report all transactions from individual customers to the IRS,” Natasha Sarin, Assistant Deputy Secretary of the Treasury for Economic Policy, wrote on the department’s website on Thursday. “This is unequivocally false and an incorrect representation of the proposals under consideration.”
The data point the publication seeks to clarify is that the measure would not require financial institutions to report individual transactions, but rather how much money went in or out of an account with $ 600 or more over the course of a given year.
The drop in the $ 600 figure has prompted lawmakers to consider raising the threshold – House Ways and Means Chairman Richard Neal, D-MA, and Senate Finance Committee Chairman Ron Wyden, D-OR , aimed at $ 10,000. Lawmakers are also considering exempting mortgage payment withdrawals, as well as direct deposits by payroll processors, from the total, Bloomberg reported.
The higher threshold, however, failed to influence business groups such as the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA), which were among the 101 organizations that wrote to executives on Thursday. majority and minority in both houses of Congress, attacking the legislation.
“Although 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,” said writes the groups.
Republicans, meanwhile, have sought to galvanize everyday consumers around the premise that increased IRS access to personal data is an invasion of privacy. In an op-ed published last week in the Lexington Herald-Leader, Senate Minority Leader Mitch McConnell, R-KY, pointed to a recent IRS data breach as evidence the agency should not rely on additional data.
The government’s power to demand information on wire transfers over $ 10,000 “allows them to detect things like money laundering, terrorism or tax evasion,” McConnell added.
“Indeed, the Washington liberals want to let the IRS flip through Americans’ current accounts as if everyone is a criminal or a potential terrorist until proven guilty,” he wrote.
Some individual banks have encouraged their customers to voice their opposition to the measure by contacting lawmakers in the House and Senate.
“We work for our customers and our community, not for the IRS,” Midwest City, Oklahoma-based FNB Community Bank wrote in an Aug. 31 post that still appears at the top of its Facebook page. “Join us in telling Congress that the IRS bank account profiling is intrusive and indiscriminate to our clients.” The post has been shared over 73,000 times.
“We proudly join @ICBA and others in telling Congress we serve our customers, not the IRS,” Coeur D’Alene, Idaho-based Bankcda shared September 30 on Twitter, accompanied by the hashtag #KeepMyBankingPrivate.
First Citizens State Bank, based in Whitewater, Wisconsin, in a Facebook post, linked to an ABA landing page with the ability to automatically generate a letter to Congress.
Representative Lloyd Doggett, D-TX, who sits on the House Ways and Means Committee, conceded to Bloomberg last month that the banks may have foiled Democrats in messages surrounding the data breach proposal.
Sarin’s message – and press appearances by more well-known Treasury officials – could therefore serve as a counterattack.
“The proposal does not involve any reporting of an individual’s individual transactions,” Treasury Secretary Janet Yellen told CBS News in an interview broadcast Tuesday.
The legislation was designed as a way to help the IRS collect more than $ 460 billion in unpaid taxes over 10 years by targeting high income earners.
Sarin’s post seeks to reassure middle-class Americans that those who earn a salary and receive a W-2 form each year are not the target of the tax gap measure. This segment, Sarin said, sees a 99% compliance rate on reporting wages to the IRS because the agency, employer, and employee all receive the W-2.
That compliance rate, however, falls below 50% for high earners who accumulate business income or forwarded income that is not reported by a third party to the IRS, Sarin said. This is where the bill intends to close the gap, she added.
“This proposition has been seriously misinterpreted,” Yellen told CBS News.