A contentious proposal in President Joe Biden’s $3.5 trillion budget plan is raising eyebrows among banks and Americans concerned about their personal finances.
The measure could give the Internal Revenue Service access to data for every transaction — “inflows and outflows” — from any bank account that has a minimum of $600, according to American Banker.
In what anyone with common sense would consider a basic violation of privacy, the move is supposed to crack down on unreported income and tax evasion, The New York Times reported.
Financial institutions are fighting back against the proposal, as it would arguably tread on their customer’s privacy and force them to rat out people to the government.
“Our associations agree the government must have adequate funding and resources to promote compliance with our Nation’s tax laws, and to that end, our members already provide significant data to the Internal Revenue Service (IRS) and other governmental units,” several banking associations, including the Bank Policy Institute and the American Bankers Association, wrote in a letter to the Senate Subcommittee on Taxation and IRS Oversight in May.
“However, recent proposals to create new reporting requirements for financial institutions would impose cost and complexity that are not justified by the potential, and highly uncertain, benefits. Furthermore, we believe additional reporting requirements guided by subjective criteria have privacy and fairness implications and the potential to put financial institutions in an untenable position with their account holders,” they added.
Patrick Hedger of the Taxpayers’ Protection Alliance told the U.K. Daily Mail that there are serious constitutional concerns if this was passed went into effect.
“The IRS is first and foremost, a law enforcement agency, and the Fourth Amendment protects against unreasonable searches and seizures in pursuit of, of looking for wrongdoing and criminal actions, so I think this is going to run into severe Fourth Amendment headwinds,” Hedger told the outlet.
While the move purportedly intends to target the wealthy, having $600 in a bank account is an extremely low bar that would put average Americans on the radar of the IRS.
Democratic Sen. Elizabeth Warren of Massachusetts and IRS Commissioner Chuck Rettig have been leading the charge with the White House to expand the agency in order to mitigate the relatively large “tax gap” that occurs because of people not reporting all of their earnings to the agency, whether intentionally or unintentionally.
Rettig wrote a letter to the senator last month advocating more funding for the agency.
“Maintaining a flat budget will continue to deprive Americans of both the nature and quality of services they deserve, producing a continuing decline in fairness and service. Adding substantial multi-year mandatory funding, however, provides an opportunity to greatly improve federal tax administration for all Americans,” Rettig wrote.
New information from the IRS, requested by me, along with @SenWhitehouse and @SenSanders, confirms: we must give IRS the funding and data it needs to catch wealthy tax cheats and make sure that big corporations pay their fair share.https://t.co/iW4U2E3Qkx
— Elizabeth Warren (@SenWarren) September 3, 2021
Allowing the IRS to look into personal bank accounts creates a slippery slope.
Finances are meant to be private, and there ought to be mutual trust between the government and citizens reporting their earnings.
Obviously, the government has an interest in preventing tax fraud among high earners, but setting the standard for surveillance so low creates a horrible precedent.
Congress must reject this radically invasive proposal put forth by the Biden administration and far-left Democrats.
Truth and Accuracy
We are committed to truth and accuracy in all of our journalism. Read our editorial standards.