Opponents of a Biden Administration proposal to require credit unions and banks to report data to the IRS from accounts that have “gross flow thresholds” over $600 have misrepresented the proposal and have engaged in spreading misinformation, a Treasury Department official charged Thursday.
“Congressional consideration of this proposal has been marred by misinformation, as opponents have elevated the pernicious myth that banks will have to report all individual customers’ transactions to the IRS,” Natasha Sarin, deputy assistant secretary for economic policy wrote in a statement posted to the department’s website.
Credit union and banking trade groups have been encouraging consumers to contact members of Congress and express their outrage over the proposal.
The Credit Union National Association has activated its “Grassroots Action Center” to encourage people to notify members of Congress of their opposition.
In outlining the proposal, CUNA says that “One proposal under consideration would require credit unions and other financial institutions to report to the Internal Revenue Service how much money has gone into and out of many consumer accounts. This proposal would violate consumers’ personal privacy by forcing credit unions and banks to provide the government with information that does not reflect taxable activity.”
The National Association of Federally-Insured Credit Unions has its own “Grassroots Action Center.” In explaining the proposal, NAFCU says, “Congress is currently considering requiring financial institutions such as credit unions to report to the IRS transactions of your business and personal accounts. This is an unprecedented invasion of privacy.”
Sarin said the program would be far more limited than that. “The financial reporting proposals under consideration do not include any information about specific transactions or what taxpayers buy,” Sarin wrote. “The IRS will receive no information whatsoever, and will have no ability whatsoever, to track specific transactions under this proposal.”
Financial institutions would be required to report “basic, high-level information” in addition to data the institutions already report, including “how much money went into the account over the course of the year, and how much came out.” She said that reporting that information would significantly increase IRS compliance because the odds of successfully evading taxes will decline.
“These changes can raise hundreds of billions of dollars over the course of the next decade, not by raising taxes or increasing oversight on American wage and salary workers, but by working to ensure that those who accrue income in more complex ways pay the taxes they owe,” she wrote.