On September 17th, the Consumer Bankers Association, the American Bankers Association, and a large number of other financial trade associations sent a letter to Speaker of the House Nancy Pelosi (D-CA), Majority Leader Kevin McCarthy (R-CA) and other House Members opposing a proposal under consideration as part of the budget reconciliation package that would require financial institutions and other providers of financial services to track and submit to the Internal Revenue Service (IRS) information on the inflows and outflows of every account above a de minimis threshold of $600 during the year, including breakdowns for cash.
The proposal is purportedly designed as a means to crack down on tax evasion by wealthy taxpayers, but the $600 threshold would reach almost all Americans with a traditional bank account. The letter criticizes the proposal as creating significant privacy concerns “without proper explanation of how the IRS will store, protect, and use this enormous trove of personal financial information.” As privacy is often cited as the reason many individuals have chosen not to participate in the traditional financial marketplace, the letters states that the proposal will also “undermine efforts to reach vulnerable populations and unbanked households.” The letter also notes that the proposal would create significant operational and reputational challenges for financial institutions and increase tax preparation costs for individuals and small businesses.
The Infrastructure Investment and Jobs Act (H.R. 3684) (current version here) was recently approved by the Senate, but must pass the House again in its current form before it can proceed to the President for signature.