(PresidentialWire.com)- The Biden administration has proposed implementing a huge change at the Internal Revenue Service that has many people concerned about privacy and practicality.
President Joe Biden initially proposed forcing banks to report all incoming and outgoing transactions of more than $600 directly to the IRS. The idea was this would help raise some revenue for the party’s two massive spending plans that will total multiple trillion dollars.
Democratic leadership has since backed off that low threshold and also narrow the scope of that provision. Still, the proposal would be a monumental shift in how banks report transactions to the government.
Right now, banks are required to file a currency transaction report on any deposit that is more than $10,000. That report goes to the Financial Crimes Enforcement Network of the Treasury Department.
The idea behind FinCen is to curtail crime and money laundering. These transactions are not used for tax purposes right now.
Democrats, though, are looking to lower that limit all the way to $600, and include both deposits and withdrawals. What’s more, they want the transactions reported to the IRS, too.
Many Republicans and tax professionals have said there are many logistical and privacy issues with this plan.
The senior policy analyst at the Tax Foundation, Garrett Watson, informed media outlet the Washington Examiner that he believes the government collecting and holding that enormous amount of data about people’s finances has huge privacy concerns.
In addition, the IRS is already battling a huge leak from a cyberattack where tax data from the wealthiest American families was released.
This concern isn’t just held by Watson. More than 140 Republican lawmakers sent letters to House Speaker Nancy Pelosi, IRS Commissioner Charles Rettig, Treasury Secretary Janet Yellen, and Ways and Means Committee Chairman Richard Neal to express this exact concern.
Recently, when Yellen appeared on Capitol Hill, she was grilled by Senator Cynthia Lummis regarding the potential privacy impact the proposal could have as well as the “dramatic new regulatory burden” it would have on banks. She asked:
“My question is: Are you aware of how unnecessary this regulatory burden is? Do you distrust the American people so much that you need to know when they bought a couch? Or a cow?”
Beyond just the privacy concerns, there are legitimate logistical worries as well. Forcing banks to report all transactions over $600 is crazy, and it would require the IRS to wade through an enormous amount of data and information that they’ve never had to deal with before.
The IRS would likely have to purchase technology and software to help process the data, and hire loads of new people to handle it, too, Watson said. He explained:
“Even if you assume that there is no privacy issue or concern with respect to taxpayer protection, it’s a lot of information for the IRS to sift through, and it’s far from clear that the agency has the capacity, the software, and the knowledge needed to sift through this amount of information to actually efficiently pursue those who are evading their tax obligations.”