The Biden administration continues to defend a proposal for the IRS to monitor every bank account with $ 600 or more in total transactions each year. It is a policy that the American Banking Association (ABA) has condemned and that the New Hampshire Bankers Association calls intrusive and complicated. and heavy.
And yet, as opposition grows across the political spectrum here in New Hampshire, the entire delegation has no comment on the plan to monitor small bank accounts. This includes Senator Maggie Hassan, who sits on the finance committee, where news of the IRS rule first came to light.
Under the plan, banks and other financial institutions would be required to report customer inflows and outflows to the IRS annually if they totaled more than $ 600 per year. The White House estimated that the policy, which would apply to bank, loan and investment accounts, would cost Americans about $ 46 billion a year.
“We believe that the reporting requirements proposed by the IRS are extremely broad, will impose themselves in the lives of almost anyone with a bank account, will be complicated and burdensome for the industry to implement, and will weigh heavily on the industry. disproportionate on our community banks, âsaid Kristy Merrill, president of the NH Bankers Association.
The ABA calls it “a new comprehensive tax reporting regime that would have a direct impact on nearly every U.S. and small business with an account at a financial institution. This proposal would create significant operational and reputation challenges for business owners. financial institutions, would increase tax preparation costs for individuals and small businesses, and create serious financial privacy concerns.
“We urge members to oppose any effort to advance this new misguided reporting regime,” the group said in a letter to Congress.
The members respond. Republicans on the Senate Finance Committee and the Senate Banking, Housing and Urban Affairs Committee sent a letter to leaders calling it a “misguided proposal” that “would violate the privacy of law-abiding taxpayers and impose new ones onerous reporting requirements to financial institutions “.
Biden’s proposal was revealed in written testimony to the Senate Finance Committee of IRS Commissioner Charles P. Rettig in June. New Hampshire Senator Maggie Hassan is a member of this committee.
Hassan declined repeated requests for comment on the plan, and she did not sign the finance committee’s letter opposing it.
Meanwhile, alongside Maine, lawmakers introduced a resolution in the House of Representatives urging Senators Susan Collins (R), Angus King (I) and the rest of the Maine congressional delegation to block the banking system.
And, says Rebeca Romero Rainey of the Independent Community Bankers of America, the American people don’t like this plan either.
An ICBA poll by Morning Consult found that 67% of voters oppose financial institutions reporting accounts receivable information to the IRS, while consumers address their customers with more than 400,000 messages. members of Congress in opposition, “Rainey said in a statement. “IRS ‘proposed statement is an invasion of consumer privacy, a violation of American due process, a risk to data security in connection with the ongoing investigation into the leaked reports of agency revenues and a threat to bipartisan efforts to reduce the unbanked population by driving more Americans out of the banking system and towards predatory lenders.
Critics also noted the IRS’s “troubling record of failing to protect certain confidential taxpayer information and abusing its authority, particularly targeting conservative political groups, this proposal would undermine confidence in the financial system and, in turn, would reduce financial inclusion â.
In 2013, the Obama administration’s IRS was caught targeting conservative organizations, denying or drastically slowing down their attempts to create advocacy organizations starting in 2010. In 2017, the IRS presented apologies as part of a court-approved settlement.
Another concern is that the rule would “have a disproportionate impact on credit unions serving rural communities” like those in much of New Hampshire, according to Jim Nussle, president and CEO of the Credit Union National Association.
“This proposal is of deep concern to U.S. credit unions and their 120 million members. From the 2014 massive data breach at the Bureau of Personnel Management to the leak of federal tax returns from the IRS this year, the The federal government’s turbulent history with regard to the storage of personal data underscores the danger the impracticability of this policy proposal. “
Nonetheless, the Biden administration is moving forward. Yellen defended the policy at a Senate Banking Committee hearing Thursday.
âI think it’s important to recognize that we have an estimated tax gap of $ 7 trillion over the next decade,â Yellen said. “It’s taxes that are owed and not paid to government that rob us of the resources we need to make critical investments to make America more productive and competitive.”
Wyoming Senator Cynthia Lummis stepped back.
âWell, the $ 600 threshold is usually not where you’re going to find the huge amount of tax revenue that you think Americans are cheating on you,â she replied, adding, âDo you know how to how unnecessary this regulatory burden is? are you so wary of the American people that you have to know when they bought a sofa? Or a cow? “
Senator Jeanne Shaheen, Representative Annie Kuster and Representative Chris Pappas all declined to comment.
This story was originally published by the NH Journal, an online news publication dedicated to providing fair and unbiased reporting and analysis on new policies of interest to New Hampshire. For more stories from the NH Journal, visit NHJournal.com.