Legislators under the Democratic party have come together to raise the threshold of President Joe Biden's radical proposal that forces banks to report to the Internal Revenue Service (IRS) transactions amounting $600 and above.
The initial proposal, which was drafted allegedly to curb tax evasion, would force banks and other financial institutions to disclose to the IRS any deposits or withdrawals of at least $600 annually to or from all business and personal accounts.
According to The Epoch Times, the new financial reporting mandate will take effect in 2022 and will be applicable to private individual and commercial business accounts owned by taxpayers. But President Biden's fellow Democrats are not too happy about the proposal, sparking some pushback on the $600 cap.
"We've reached an agreement to not have the $600 [cap]," House Ways and Means Committee Chairman Richard Neal, a Democratic leader representing Massachusetts, said as per Bloomberg. Neal said he and other Democratic leaders are looking to abolish the $600 cap and establish a higher threshold of $10,000, which details still being ironed out.
The current Bank Secrecy Act mandates U.S. financial institutions to report all wire transfers of more than $10,000 to the government. It also requires them to report suspicious cash transactions to prevent money laundering.
However, Biden and his Democratic Congress allies say the threshold must be lowered to close the "tax gap," defined as the difference between what current federal law requires to be collected by the government and how much actually goes into the Treasury.
The president added that the new IRS reporting proposal is not about raising the taxes of the rich, but instead "about the super-wealthy finally beginning to pay what they owe-what the existing tax code calls for-just like hardworking Americans do all over this country every Tax Day," as he explained during a press conference on September 16.
According to a Treasury Department estimate, the original White House proposal would gather about $463 billion in 10 years, while a higher cap would raise less. Nonetheless, this funding may go to offsetting the cost of a better state and local tax or SALT deduction. The Treasury Department has previously called for expanded bank reporting requirements as a way to reduce the tax gap, giving the IRS access to income that they cannot verify under existing laws.
But the American Bankers Association (ABA) and up to 40 business and financial groups disagree. In a letter sent to Democratic House Speaker Nancy Pelosi and Republican House Minority Leader Kevin McCarthy, the group described it as an "ill-advised proposal" that oversteps one's financial privacy.
The group claimed that the proposal would "increase tax preparation costs for individuals and small businesses, and create serious financial privacy concerns. We urge members to oppose any efforts to advance this ill-advised new reporting regime."
Republican Senator John Boozman of Arkansas agreed, calling it a method for the Biden administration to "weaponize the IRS" and spy on "everybody's transactions and then hoping that perhaps they find something that's not getting reported so they can come after you and get that income."
NOQ Report called the proposal "financial spying" as the Biden administration failed to mention the risks that come with having people's "purchases and receipts monitored by Big Brother."
