Biden’s Proposed Legislation: Allowing IRS access to bank accounts over $600

Biden’s Proposed Legislation: Allowing IRS access to bank accounts over $600

Will Sherry, Contributor
September 29, 2021

As our 46th president Joe Biden approaches his second year in office, another new legislation has been thrown at us. The Biden Administration is currently trying to pass a legislation to enforce all financial institutions to report more information on financial accounts with a balance of more than $600. The goal of this plan is to hopefully catch tax cheats, but the more public it becomes, the more it looks as if it’s a way to spy on the taxpayers’ bank account. Under the proposed legislation, “financial institutions would report data on financial accounts in an information return. The annual return will report gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner. This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow of $600 or a fair market value of $600.”

This measure, if approved, would begin in 2023.

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In its simplest form, President Biden’s proposal would give the IRS more information on financial accounts with more than $600

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As it is just a proposal, as it goes through congress a lot could change and we have already seen this through the pushback that has so far been received. According to a tweet from Representative Brett Guthrie (R-KY), U.S. Representatives from nine separate states, not including Ohio, sent a letter to Speaker Nancy Pelosi, the IRS Commissioner, and others in part. This letter strongly opposed this proposed plan, stating that the plan would, “infringe on the privacy of millions of Americans.”

This bank-reporting proposed legislation giving the IRS a wider eye into the inflows and outflows of many account owners, has gained heavy lobbying pushback from banks, along with rejection from Republicans and some Democrats who are concerned about giving the agency too much power over the taxpayers’ personal data. 

As a pushback to the newest Biden Administration proposal, U.S. Senator Tommy Tuberville has proposed a new bill that would prohibit the Internal Revenue Service from requiring banks and credit unions to report customers’ transactions or account balances beyond current statutory requirements.

To date the Bank Secrecy Act requires financial institutions to only report transactions of $10,000 or greater, but with Biden’s new proposal, it would lower that marker to as little as $600. 

Tuberville, before introducing his bill named the Protecting Financial Privacy Act, stated, “We want everybody to pay their fair share. I’ve got no problem with that. But I don’t want the federal government, ‘big brother,’ to be harassing private citizens. I don’t want them harassing banks.”

As Tuberville holds status in the Senate Minority, this bill becomes increasingly difficult to pass, so his general intent is less to pass the bill, but more to draw attention to the new tax proposal in hopes that public pressure would convince the Democratic party to nullify it. Tuberville states, “Most folks have no idea that this is part of the Biden plan. So what we’re trying to do is get the information out to the American taxpayer, not just Republicans, but Democrats too. This should be a bipartisan piece of legislation. I tell you, the Democrats don’t want the IRS any bigger than we do.”

According to Bloomberg news, in congress last week, Democrats negotiating the issue agreed to scale back the Biden IRS plan. House Ways and Means Committee Chairman Richard Neal told the news source that he wants to raise the $600 gateway from privacy. 

In a report on September 7th from Deputy Assistant Treasury Secretary Natasha Sarin stated that the estimate with the $600 threshold for reporting requirements, this would raise as much as $480 billion in tax revenue over a decade.

Tuberville states that this new IRS requirement would most negatively impact minorities and rural Americans, as it would discourage them from making bank transactions in fear they will be tracked heavier by the federal government. He is also greatly concerned about the impact of community banks and credit unions, and the costs that a legislation like this would impose on the small business like these banks.