Draft tax legislation to be marked up by the House Ways and Means Committee this week does not contain a controversial proposal to require financial institutions to report the inflows and outflows from customer accounts to the Internal Revenue Service.
The 811-page draft tax bill is only one section of the Democrats’ massive budget reconciliation plan, and the tax provision could be added during the House markup or when the Senate considers its bill.
“We’re not out of the woods yet,” Ryan Donovan, chief advocacy officer at the Credit Union National Association said Monday.
The Biden Administration has proposed requiring financial institutions to report data from accounts that have “gross flow thresholds” over $600 as a way of increasing tax compliance.
However, many Republicans and financial services trade groups have been lobbying tax bill writers to ensure the provision is not in the legislation. The proposal, they contend, would create a regulatory burden on financial institutions.
Rep. Tom Emmer, R-Minn., a member of the House Financial Services Committee, has been circulating a letter among House Republicans in opposition to the controversial proposal. More than 140 House members have signed the letter.
“It’s ridiculous,” Emmer said at the National Association of Federally-Insured Credit Unions “Congressional Caucus” on Monday. “Talk about regulatory over-reach.”
Emmer added that the IRS has suffered from a lack of data security, with sensitive taxpayer information being leaked. “If it can’t handle the data, it already has, why should we give it more?” he asked.