WASHINGTON — The Treasury Department said opponents of a plan requiring that banks report more customer data to the Internal Revenue Service are peddling “misinformation.”
The reporting proposal,
But the Biden administration appears concerned that a centerpiece of its tax compliance policy — intended to help the IRS crack down on wealthier Americans who are not paying what they owe — is being misrepresented.
“Congressional consideration of this proposal has been marred by misinformation, as opponents have elevated the pernicious myth that banks will have to report all individual customers’ transactions to the IRS,” Natasha Sarin, deputy assistant secretary for economic policy, wrote in a memo published by Treasury.
Banks and their political allies have sought to frame the proposal as a costly compliance burden for financial institutions and a privacy nightmare for customers. But proponents of the plan — including Treasury — say
“Instead, the proposal would direct banks to report basic, high-level information on aggregate account inflows and outflows,” Sarin wrote in the memo. “Banks would add just a bit of additional data to information that they already supply to taxpayers and the IRS: how much money went into the account over the course of the year, and how much came out.”
The Biden administration has argued that such data would make it far easier for the government to identify high-income tax avoiders and bring in overdue taxpayer dollars — as much as $463 billion over 10 years.
Many opponents have suggested that the Treasury plan could force banks to report data as granular as individual customer transactions rather than aggregate account flows. But Sarin said that notion was “unequivocally false, and an incorrect representation of the proposals under consideration.”
“Simply put, the financial reporting proposal in front of Congress does not mandate that individual transactions of any amount be reported to the IRS,” Sarin wrote.
In recent weeks, Republican lawmakers have
The original proposal called for a dollar account threshold of just $600 before banks would be required to submit account flow data to the IRS. In recent weeks, Democrats have floated a higher threshold of $10,000 and exemptions for certain types of transactions, such as direct deposits from payroll processors.
On Tuesday, House Speaker Nancy Pelosi of California told reporters that Democrats still planned to include the IRS reporting plan in the final version of budget reconciliation.
“Yes, there are concerns that some people have, but if people are breaking the law and not paying their taxes, one way to track them is through the banking measure,” Pelosi said.
Trade groups representing banks and other industries reaffirmed their opposition to the plan in a separate letter submitted to congressional leaders on Thursday.
"We believe that this program is costly for all parties, not fit for purpose, and loaded with the potential for unintended and serious negative consequences," the groups wrote. "As associations representing a broad cross-section of financial and business interests, we urge you to oppose any efforts to institute this new reporting regime."
