Dems’ plan to limit IRS reporting limit to $10K sparks similar backlash
The Biden administration this week agreed to withdraw a deeply controversial proposal that would force banks to hand over the account information of most customers to the bank. Internal Revenue Service Under criticism from both industry groups and Republicans – but banks say the measure is still too far and poses a serious privacy concern.
Under the new plan Senate Democrats unveiled Tuesday, banks, credit unions and other financial institutions would be required to report annually on accounts with deposits and withdrawals of more than $10,000, rather than the $600 limit that would. President Biden initially proposed.
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“Today’s new proposal reflects the administration’s conviction that we should zero out those on top of income who don’t pay their taxes, while protecting American workers by setting bank account limits at $10,000 and exemptions.” provide salaried workers such as teachers and firefighters,” Treasury Secretary Janet Yellen said in a statement.
In addition to fierce backlash from Republican lawmakers, the tightening of the plan follows a steady lobbying campaign from banking groups and other industry organizations, which amounted to government redundancies of the worst kind.
However, with a thinner scope, banks and other industry groups have argued that the policy presents a potential financial privacy risk for customers, while increasing compliance costs for banks and adding to the already existing burdens that the government has to bear. have to deal with providing information.
“It has become absolutely clear that Americans oppose the IRS for obtaining additional information on their financial accounts,” NAFCU President and CEO Dan Berger said in a statement. “The updated plan is nothing more than window dressing in an attempt to garner support for a flawed proposal.”
The White House has repeatedly defended the plan, writing in a memo to congressional Democrats that the agency requires banks and financial institutions to provide “a little bit of high-level information” on account flows to wealthy Americans. Gives more information about earnings. from investment and business activities. Recipients of federal benefits such as unemployment and Social Security would be exempt from the policy, which would also exclude any income received through a paycheck in which federal taxes are automatically deducted.
“This is a well-thought-out amendment: For American workers and retirees, the IRS already has information on wage and salary income and the federal benefits they receive,” said a Treasury Department fact sheet on the changes.
Banks are already required to report any transaction over $10,000 to the Financial Crimes Enforcement Network – which is part of the anti-money laundering requirements.
The Biden team has stressed that banks must not report individual transactions to the IRS, but “basic, high-level information on account inflows and outflows” and audit rates of no less than $400,000 annually for Americans. Will increase
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But Ryan Donovan, executive vice president of the National Association of Credit Unions, argued that raising the annual minimum reporting limit from $600 to $10,000 had little effect on minimum-wage workers, who would likely still be swept away by the law.
“Every time this offer changes, it gets worse,” Donovan said. “For the country’s minimum wage workers, there is no fundamental difference between the reporting limit of $600 and the reporting limit of $10,000.”