A controversial proposal to require credit unions and banks to report certain transactions to the Internal Revenue Service remains alive, following House passage of an FY22 budget resolution on Tuesday.
The House passed the Senate version of the budget framework, 220-212, so a House-Senate conference will not be needed.
Efforts to ensure that the financial reporting proposal will not appear in budget reconciliation legislation later this year failed in the House this week, just as it did in the Senate.
In his FY22 budget, President Biden proposed requiring financial institutions to report data to the IRS from accounts that have “gross flow thresholds” over $600 as a way of increasing tax compliance.
Credit union trade groups have argued that the plan would pose a regulatory burden and that the IRS has had a problem with keeping its data private.
Following Labor Day, House and Senate committees will begin work on reconciliation bills that will contain Democratic spending proposals and proposals to find savings to pay for them. It will be up to the tax-writing committees—the House Ways and Means Committee and the Senate Finance Committee—to decide whether the financial reporting plan is included in the legislation as a way to increase tax compliance and raise revenue.
During testimony before the House Rules Committee Monday, Rep. Pete Sessions, R-Texas, said he believes that the reporting provision violates the 4th Amendment of the United State Constitution. That amendment is intended to protect Americans from unlawful searches.
He added that no hearings have been held on the proposal or how the IRS would implement it. However, the Rules Committee declined Sessions’ request to be able to offer an amendment in opposition to the proposal.
House Rules Committee member Rep. Ed Perlmutter, D-Colo., attempted to convince Sessions that House committees will examine the plan before including it in any legislation. “We will look closely at that language,” said Perlmutter, who also chairs the House Financial Services Committee’s Consumer Protection and Financial Institutions Subcommittee.