A group of Republican members of the U.S. House of Representatives have expressed concerns to Congressional leaders and Biden Administration officials about a proposal on Internal Revenue Service (IRS) data collection that would increase tax information reporting requirements on financial institutions.
The proposal would require financial institutions to report certain transaction level data as well as information about the outflows and inflows on accounts over $600 to the IRS every year.
U.S. Rep. Tom Emmer (R-MN) said the requirements of the proposal would impose significant compliance costs on banks, credit unions, and related financial institutions. He also said it would infringe on the privacy of millions of Americans.
“Our Main Street financial institutions are already required to report a tremendous amount of data to the IRS, and the IRS has proven time and time again that they cannot protect this sensitive taxpayer information. Privacy is one of the main reasons individuals choose not to open bank accounts. This proposal will further exacerbate the divide between the banked, unbanked and underbanked,” Emmer said.
Emmer was among more than 140 Republican members of Congress who sent a letter on Sept. 13 to House Speaker Nancy Pelosi (D-CA), Ways and Means Committee Chair Rep. Richard Neal (D-MA), Treasury Secretary Janet Yellen, and IRS Commissioner Charles Rettig with their concerns.
“Not only are there serious privacy implications for the taxpayer and compliance burdens for our financial institutions, but there is also no reason to believe that handing more sensitive information over to the IRS will assist in any way in closing the ‘tax gap’ – the difference between taxes paid and taxes owed by law. We should only legislate when it makes sense, and it must protect Americans and our financial system, not focus on raising revenue at the expense of our taxpayers and financial institutions,” Emmer added.
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