The letter expresses serious privacy implications for the American taxpayer and compliance burdens for our financial institutions related to a new proposal, which was included in the Biden Administration’s proposed American Families Plan
Washington, DC— September 13, 2021…Today, Congressman Steve Womack (AR-3) joined Congressman Tom Emmer (MN-6) and other lawmakers in sending a letter to Speaker Pelosi, Ways and Means Chair Neal, Department of Treasury Secretary Yellen, and Internal Revenue Service (IRS) Commissioner Rettig to express concern with a recent IRS data collection proposal that will increase tax information reporting requirements on financial institutions.
Specifically, the proposal would require financial institutions and other financial services providers to report certain transaction-level data as well as information about the outflows and inflows on accounts over $600 to the IRS every year. The requirements of this proposal would impose significant compliance costs on our banks, credit unions, and related financial institutions, but also infringe on the privacy of millions of Americans.
Read the full letter below or here:
Dear Speaker Pelosi, Chairman Neal, Secretary Yellen, and Commissioner Rettig:
We are concerned about a recent IRS data collection proposal to increase tax information reporting requirements on financial institutions, which we do not believe are necessary or helpful toward closing the “tax gap.”
The recent spending proposal to include new tax information reporting requirements for financial institutions would not only impose significant compliance costs on our banks, credit unions, and related financial institutions that have served as the backbone of this economy these past 18 months, but also infringe on the privacy of millions of Americans.
Specifically, such a proposal would require financial institutions and other financial services providers report information about the outflows and inflows on accounts over $600 to the IRS every year. However, financial institutions currently report a tremendous amount of data to the IRS, and no evidence has shown that the proposed requirements would substantially aid the IRS’s efforts to close the tax gap beyond the information already at the IRS’s disposal.
Not only would such an overly comprehensive IRS database require significant resources to build, maintain, and protect, but it would make the personal, financial data of millions of Americans vulnerable to attack. Considering the IRS experiences 1.4 billion cyberattacks annually and has experienced multiple data breaches, we should not give this agency additional sensitive data to manage.
Additionally, privacy is one of the primary reasons individuals choose not to open bank accounts. This overreaching proposal, if adopted, would further exacerbate banked/unbanked/underbanked divides.
We ask you to address our concerns as we work to craft a regulatory environment focused on protecting Americans and our financial system, not one focused on raising revenue at the expense of our taxpayers and financial institutions.