Banks will be forced to trade more bank account information to the IRS
NS Biden The administration this week backed a truncated version of its deeply controversial plan that would force banks to turn over more account information Internal Revenue Service To crack down on tax evasion.
Under the new plan Senate Democrats unveiled Tuesday, banks, credit unions and other financial institutions would be required to report accounts with deposits and withdrawals of more than $10,000 annually, rather than the $600 limit President Biden had set. was initially proposed.
The Treasury Department is proposing two new data points — how much money went into the account during the year, and how much came out — for an existing tax form that used to have banks report other information to the IRS.
“Today’s new proposal reflects the administration’s conviction that we should zero in on 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 plan’s tightening 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 burden that the industry has to bear with the government. It is difficult to provide information.
Rob Nichols, president and CEO of the American Bankers Association, said, “Even with the amendments announced today, this proposal is still forcing financial institutions to share IRS personal financial data from millions of customers whose taxes have been fraudulent. There is no doubt.” , said in a statement.
He added: “If enacted, this new proposal would still raise the same privacy concerns, increase tax preparation costs for individuals and small businesses, and create significant operational challenges, particularly for community banks.”
The White House has repeatedly defended the plan, writing in a memo to congressional Democrats that the IRS requires banks and financial institutions to provide “a little bit of high-level information” on account flows to the agency for 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. According to Senate Finance Speaker Ron Wyden, D-Ore., the proposal would also exempt large purchases such as a down payment for a home.
The Treasury Department said the carving is designed to ensure that “only those who earn other forms of income in opaque ways are part of the reporting regime.”
“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 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.
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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 for Americans of no less than $400,000 annually. Will increase
The plan will help fund Biden’s signature social spending bill, which will generate $700 billion in new revenue that will stem from the establishment of programs such as universal pre-kindergarten, the expansion of Medicare and the extended child tax credit by one year. direction to go.