Democrats narrow IRS bank reporting proposal to $10,000 transactions

·4 min read
Democrats narrow IRS bank reporting proposal to $10,000 transactions

Democrats under pressure from the GOP and the banking industry announced that they are raising the cap to $10,000 on a proposal that all bank transactions of more than $600 be reported to the IRS.

Sens. Ron Wyden of Oregon, who heads the Finance Committee, and Elizabeth Warren of Massachusetts announced the change on Tuesday afternoon, just hours after the proposal was endorsed by Treasury Secretary Janet Yellen.

“Today’s new proposal reflects the Administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe, while protecting American workers by setting the bank account threshold at $10,000 and providing an exemption for wage earners like teachers and firefighters,” Yellen said in a statement.

During a call with reporters, Wyden pointed out that IRS commissioner Charles Rettig testified that the tax gap could be as high as $1 trillion per year. He said the information reporting proposal would narrow the gap, which represents the amount of taxes owed versus the amount paid. Wyden said the proposal is specifically designed to target the wealthiest tax cheats.

DEMOCRATIC PLAN TO HAVE BANKS REPORT TRANSACTION DATA TO IRS RAISES PRIVACY FEARS

"Working people pay their taxes voluntarily because they know their employer is sending their numbers to the IRS," Wyden said. "A wealthy business owner on the other hand is on an honor system. The arguments against information reporting have always been the same and they've always been wrong."

The initial iteration of the proposal required banks to report all account inflows and outflows of over $600 to the IRS as a way of cracking down on tax fraud and bringing in revenue for Democrats’ multitrillion-dollar infrastructure and social spending package.

Republicans objected to the notion and said that the idea was logistically burdensome, would be too intrusive, and would not target the wealthy as intended, but rather, would go after most people in the country, given the low threshold.

A group of GOP senators addressed the revised proposal preemptively during a noon press conference on Tuesday. They said that even with the cap raised to $10,000, the plan would still hit the average person.

“If they raise it to $10,000, it will still capture everybody and every small business,” said Sen. Pat Toomey of Pennsylvania, ranking member of the Banking Committee. “What will happen if they actually implement this? Americans will lose their privacy, private information is going to be provided about them — the IRS won’t know what to do with it, they’ll just get flooded with a massive, massive number of individual and small business accounts.”

Some of the GOP senators menaced the specter of socialism in their appeal to reject the proposal. John Kennedy of Louisiana said that Chinese ruler Xi Jinping “would be proud” of the “squid-brained” plan.

“Marx is on our doorstep right now,” exclaimed Sen. Kevin Cramer of North Dakota. “It shouldn’t surprise us that [Democrats] have got the boldness to do this.”

Despite complaints from Republicans that the $10,000 proposal would still capture a large chunk of the population, the Treasury Department said that it is intended to detect high-income evasion and asserted that audit rate would not rise relative to past years for those making less than $400,000 annually.

The proposal would also not apply to payroll deposits for wages or for those bringing in money from federal programs such as Social Security.

During the phone call Tuesday, Wyden, who called himself a "privacy hawk," also made a point of highlighting that the proposal would not target every specific transaction.

"We're not creating any new surveillance," he said. "This proposal is all about reporting only two numbers once per year — the total number going into an account and the total amount going out of it. That is where we see the most egregious lies and misrepresentations from Republicans. All that would be reported is two numbers. The IRS would not know what any taxpayer is purchasing."

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

The American Bankers Association, one of the largest and most powerful lobbying groups in Washington, trashed the revised proposal and said it is still too extensive.

"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," said Rob Nichols, ABA's president and CEO. "The exclusion of payroll and federal program beneficiaries does not address millions of other taxpayers who would be impacted by the proposal."

Washington Examiner Videos

Tags: News, Taxes, IRS, Bank, Infrastructure, Janet Yellen, Biden Administration

Original Author: Zachary Halaschak

Original Location: Democrats narrow IRS bank reporting proposal to $10,000 transactions