The Biden administration has released a proposal to empower the IRS to monitor transactions going into and out of personal and business bank accounts, raising concerns about Americans’ right to privacy.
Accordingly, banks would be required to turn over to the Internal Revenue Service (IRS) detailed information on all deposits and withdrawals through business and personal accounts worth more than $600, regardless of tax liability.
“This proposal would create a comprehensive financial account information reporting regime,” the Department of Treasury said in its “General explanations of the administration’s fiscal year 2022 revenue proposals.”
“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,” the department explained.
“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 threshold of $600 or fair market value of $600.”
According to Eagle Country Online, some banks have informed their customers about the Biden administration’s new proposal and encouraged them to contact their lawmakers to oppose the new IRS reporting requirements.
Civista Bank released a statement on Monday, which wrote: “While we typically do not raise issues occurring in Washington with our customers, Congress is considering requiring financial institutions to report detailed information on customer bank accounts to the IRS.”
“This raises serious questions about your right to privacy,” the bank said. “We encourage you to contact your member of Congress and let them know you oppose this proposal.”
In its statement, FCN Bank said that: “This indiscriminate, comprehensive bank account reporting to the IRS can soon be enacted in Congress and will create an unacceptable invasion of privacy for our customers.”
The Maine House of Representatives on Wednesday, Sept. 22, introduced a resolution, urging Sen. Susan Collins (R), Sen. Angus King (I), and the rest of the Maine congressional delegation to oppose the Biden administration’s proposal, Forbes reported.
The resolution pointed out, “President Joe Biden wants the IRS to have automatic access to information about every Americans’ bank account as well as every PayPal, Venmo, and CashApp account, even if without any accusations of wrongdoing.”
“This is unprecedented Federal intrusion into the financial lives of every day Americans. It is an expansion of the surveillance state and it is time to pushback. As state legislators it is our duty to stand up, be proactive and protect those we represent. This resolution should be filed and supported in every statehouse in the nation. Legislators need to be bold and find ways in their state statutes to legislatively nullify this unconstitutional abuse of power.”
Suppose the Biden administration’s proposal is enacted. In that case, more than 96 million Americans who use peer-to-peer payment transaction apps, and the millions of Americans who use such apps would be subjected to taxation on transactions greater than $600.
Forbes cited Ryan Ellis, president of the Center for a Free Economy, says that “The IRS has no business snooping around the bank accounts of honest small employers.”
“These nitpicking tax audit schemes are born in faculty lounges and musty bureaucratic files courtesy of tax law professors who have never had to meet a payroll or file a business tax return,” Ellis, an IRS-enrolled agent, said.