President Joe Biden speaks with reporters as he departs after a House Democratic Caucus meeting on Capitol Hill, Friday, Oct. 1, 2021, in Washington. (AP Photo/Alex Brandon)
Banks and Republican lawmakers are crying “government overreach” and “invasion of privacy” over a Biden administration proposal that’s widely seen as allowing Internal Revenue Service surveillance of customer accounts with total annual deposits or withdrawals of more than $600.
Looking for ways to pay for the president’s $3.5-trillion Build Back Better infrastructure bill, the Biden administration proposed going after $7 trillion in unpaid taxes, mostly from wealthy Americans and businesses, New York Times reported.
“There’s a lot of tax fraud and cheating that’s going on”, Treasury Secretary Janet Yellen told CBS News anchor Norah O’Donnell. However, Yellen insisted that the proposed $600 IRS reporting requirement for banks was a way to hold billionaires accountable, and “absolutely not” government surveillance to get access to U.S. bank accounts.
Banks already submit tax forms to the I.R.S. showing interest that customer accounts accrue. The new proposal would go further, requiring them to share account balance information so that the IRS can audit for large discrepancies between reported income and what people and businesses have in the bank.
The measure is not about tracking individual transactions of lower- or middle-class households. It’s expected to raise $460 billion in additional revenue over 10 years — mainly from the wealthiest Americans, according to the U.S. Treasury. It will affect more than 100 million households and millions of businesses.
“This is about making sure the top 1 percent can’t evade $160 billion per year in taxes,” said Alexandra LaManna, a Treasury Department spokeswoman.
Republican politicians are having a field day.
“In oppressive regimes like Cuba and communist China we’ve come to expect the surveillance state, where the government has access to every part of a person’s life. Now Joe Biden wants to bring that to America,” said Sen. Rick Scott (R-Fla) on Oct. 7 from the Senate floor.
“The bulk data collection they are proposing will do nothing to close the so-called tax gap,” Sen. Tommy Tuberville (R-Ala.) said in an Oct. 7 press release. “All it does is violate the liberty of every freedom-loving American who values their financial privacy.”
Tuberville is pushing for the Senate to pass his proposed legislation, the Protecting Financial Privacy Act, which builds on a pre-existing law, the Bank Secrecy Act, and would prevent the IRS from accessing the financial transaction data of wealthy Americans.
Sen. Elizabeth Warren (D-Mass) has warned that the IRS has its hands tied when it comes to tracking the income of the richest.
“The kinds of income that the IRS has the least visibility into are the kinds of income that are overwhelmingly concentrated among the very richest taxpayers,” Warren said. “Strengthening information reporting, as well as providing protected and sustained IRS funding, would ensure that we focus enforcement on the biggest fish.”
The pushback may pressure the Biden administration to scale back the proposal, NYT reported. Lawmakers are discussing raising the disclosure level from $600 to $10,000, according to a Treasury official. Taxpayers who are paid through payroll-processing companies could be exempt from the required reporting. The Treasury estimates that a scaled-back version could reduce the amount of money it could recoup from $460 billion to $200-to-$250 billion over 10 years.
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