WASHINGTON – United States House Speaker Nancy Pelosi, D-Calif., Doubled down on the inclusion in a spending bill of a Democratic provision that would require banks to report transactions to the IRS for accounts with more than $ 600.
When asked on Tuesday whether IRS oversight would remain in the Democrats’ $ 3.5 trillion reconciliation bill, Pelosi emphatically said “yes.”
“Some people have concerns, but if people are breaking the law and not paying their taxes, one way to track them is the banking measure,” she told reporters. “I think $ 600 … that’s a negotiation that will continue on the amount, but yes.”
The âconcernsâ Pelosi refers to come from a wider range of critics as banks, other businesses, lawmakers and trade associations oppose the plan.
âThe effects of this program are severe and far-reaching, placing the IRS between millions of people and their banks,â said Billy Rielly, spokesperson for the Consumer Bankers Association.
As part of President Joe Biden’s Build Back Better plan, the IRS would receive a significant increase in funding to bolster its audit efforts. Democrats argue that increasing audit revenue would more than pay for the investment and help fund the $ 3.5 trillion bill’s provisions.
This issue sparked national controversy, however, when news broke that banks would be required under the Democratic proposal to report bank transactions over $ 600 to the IRS as well as transactions for accounts containing more than $ 600. $.
“I’m not surprised by [Pelosiâs comments], that they would continue to move forward … we will continue to oppose, âsaid Aaron Stetter, executive vice president of policy and political operations at Independent Community Bankers of America. âThe proposal has yet to be confirmed, so the heck is in the details butâ¦ it’s going to be impractical. It will make bank administration much more difficult, and all of that burden falls disproportionately on the smaller banks that don’t. do not have the [same] ability to maintain all that compliance.
Stetter said IRS oversight is a “virtual violation of due process,” an argument also made by some lawmakers. He added that small businesses, real estate agents and other regular Americans will be flagged and audited at higher levels as part of the plan and that the banks he represents have heard from many affected customers because of the provision. .
“You are considered a tax evader until proven guilty,” he said.
Democrats have argued the plan will help catch wealthy tax evaders, but opponents say it will place a major burden on banks and be a massive data collection by the federal government affecting the vast majority of Americans, not just Americans. rich.
Democrats have indicated their intention to push the proposal forward, although they have said the $ 600 figure could rise to a higher benchmark.
Meanwhile, opposition to the proposal continued to grow.
Tennessee Treasurer David Lillard called Biden’s plan a “privacy breach” this week, joining about two dozen state treasurers who have contacted the Biden administration to voice concerns about the plan.
“While the Biden administration tries to portray this as ‘an improvement in tax compliance’ for the rich, this plan is a massive invasion of the privacy of middle-income Americans and an unnecessary and enormous compliance burden on community bankers. “said Lillard. “This will dramatically increase the number of unbanked people in our country.”
More than 40 trade associations sent a letter last month to the Biden administration asking them to end the IRS monitoring system, citing privacy and security concerns as well as the financial burden on banks to comply with the complex regulations.
The letter was signed by industry groups from all walks of life as well as banking groups including the Consumer Bankers Association, the American Bankers Association and others.
Republican lawmakers have also challenged the Democrats’ plan.
“Nancy Pelosi confirms that the Biden plan will give the IRS your private banking information if you have * only $ 600 * in your account,” wrote US Senator Tom Cotton, R-Ark, on Twitter. “When they say they will only tax the rich, they are lying.”