Democrats Vote To Make More Ordinary Americans Subject To Political IRS Witch Hunts

President Biden Is ‘Asking Congress To Enact A Sweeping New Law Requiring Financial Institutions To Report Gross Inflows And Outflows On All Business And Personal Accounts Above $600 To The IRS’

“President Joe Biden wants to boost the IRS budget by $80 billion over 10 years, mostly through mandatory funding that would flow automatically, to provide a sustainable budget that would allow the agency to step up its enforcement activities. The president is also asking Congress to enact a sweeping new law requiring financial institutions to report gross inflows and outflows on all business and personal accounts above $600 to the IRS. Treasury estimates that combined these proposals would narrow the tax gap of revenues owed but not paid and raise roughly $700 billion over 10 years.” (“Distrust Of IRS Drives GOP Critique Of Biden Tax Enforcement Plan,” Roll Call, 6/10/2021)

“The proposal would require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirement would also extend to peer-to-peer payment services such as Venmo…” (“Biden Tax Plan Leans on Banks to Help Find Unreported Income,” The Wall Street Journal, 4/29/2021)

The Wall Street Journal Editorial Board: ‘Requiring More Third-Party Reporting Would Ensnare Tens Of Thousands Of Small Fish In Hopes Of Catching A Whale. Banks And Platforms Like PayPal Could Be Conscripted As Tax Police’

THE WALL STREET JOURNAL EDITORIAL BOARD: “Mr. Biden’s plan would also upgrade IRS software and require banks and other third-parties to report more information on taxpayers. The former would be useful. But requiring more third-party reporting would ensnare tens of thousands of small fish in hopes of catching a whale. Banks and platforms like PayPal could be conscripted as tax police.” (Editorial, “Biden’s Stimulus For The IRS,” The Wall Street Journal, 5/03/2021)

Financial Institutions: ‘The IRS Has No Justifiable Right To This Data’, ‘Rather Than A Targeted Program, This Proposal Would Create A Dragnet, Collecting The Financial Information Of Most Americans And Requiring Significant Resources To Build, Police, And Maintain’

12 TRADE ASSOCIATIONS REPRESENTING BANKS, CREDIT UNIONS, AND RELATED FINANCIAL INSTITUTIONS: “On May 28th, 2021, the Administration released its fiscal 2022 budget proposal and related ‘Green Book’ At this time, we understand and appreciate there are not detailed official proposals on how the additional reporting requirements and related administration would work. That said, the limited additional information included in the Green Book suggests that this new regime could be exceptionally expansive and comprehensive, covering the accounts of most Americans, rather than only the ‘wealthiest,’ as described in the American Families Plan. …  This proposal will have real costs, not only for government, but also for financial institutions, small businesses, and individual taxpayers.” (12 Trade Associations Representing Financial Institutions, Joint Statement for the Record to the House Ways and Means Committee Hearing, 6/10/2021)

• “If enacted, this proposal would require financial institutions and other providers of financial services to track and submit information on every account above a $600 de minimis threshold. Rather than a targeted program, this proposal would create a dragnet, collecting the financial information of most Americans and requiring significant resources to build, police, and maintain. Policymakers must consider how account-holder data would be protected and whether a program of this scale and scope infringes on the American people's reasonable expectation of privacy.” (12 Trade Associations Representing Financial Institutions, Joint Statement for the Record to the House Ways and Means Committee Hearing, 6/10/2021)

AMERICAN BANKERS ASSOCIATION AND 51 STATE BANKERS ASSOCIATIONS: “On behalf of the members of the American Bankers Association (ABA) and the undersigned State Bankers Associations, representing banks of all sizes in every state, we write to express concerns about a proposal included in the Administration’s American Families Plan that would create new tax information reporting requirements for financial institutions. We urge members to oppose any efforts to advance this significant new reporting regime for a number of reasons we detail below.” (American Bankers Association and 51 State Bankers Associations, Letter to Sens. Wyden and Crapo and Reps. Neal and Brady, 7/20/2021)

• “Although limited information is available, we understand this proposal would require financial institutions and other providers of financial services to track and submit to the IRS information on every account above a de minimis threshold of $600 of inflows and outflows during the year. This proposal would create a dragnet, collecting the financial information of most Americans and requiring significant resources to build, police, and maintain. Policymakers must consider how account-holder data would be protected and whether a program of this scale and scope infringes on the American people’s reasonable expectation of privacy. As noted in the Administration’s Tax Compliance Agenda, the IRS experiences 1.4 billion cyberattacks annually, has had multiple data breaches, and continues to deal with the fallout of identity theft and false tax returns. Adding an entirely new set of data may compound the IRS’s systemic problem and expose even more taxpayer data.” (American Bankers Association and 51 State Bankers Associations, Letter to Sens. Wyden and Crapo and Reps. Neal and Brady, 7/20/2021)

• In addition to the challenges associated with protecting this new data, policymakers should consider the potential unintended consequences of leveraging bank relationships to execute such a large-scale and detailed reporting regime. Privacy concerns are already cited as one of the top reasons that individuals choose not to open bank accounts. A reporting regime of this magnitude could exacerbate the wealth gap in this country by pushing those households on the cusp of banking services back into the unbanked and underbanked population.” (American Bankers Association and 51 State Bankers Associations, Letter to Sens. Wyden and Crapo and Reps. Neal and Brady, 7/20/2021)

REBECA ROMERO RAINEY, President & CEO of the Independent Community Bankers of America: “The Administration’s Greenbook proposal to require bank account reporting on all accounts with a gross flow threshold or fair market value of more than $600 is opposed by consumer groups, small business groups, and financial institutions of all charter types and sizes as intrusive and overreaching. … Community banks collect financial data for the purpose of serving their customers: to safeguard their funds, provide checking, card, and other payments services, and extend credit. The IRS has no justifiable right to this data. It is not and must not be a public good. This overreaching proposal would fundamentally redefine the relationship among financial institutions, their customers, and the IRS.” (Independent Community Bankers of America’s Rebeca Romero Rainey, Letter to Members of the United States Senate, 8/10/2021)

JIM NUSSLE, President & CEO of the Credit Union National Association: “In an effort aimed at increasing taxpayer compliance, the Administration has proposed that financial institutions be required to report additional account holder information in an enhanced annual I.R.S. Form 1099-INT. Banks, credit unions, and other entities would be required to annually report to the IRS the gross inflows and outflows of account holders (businesses and individuals) with a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner. CUNA remains concerned about the effect this proposed new requirement will have on credit unions. Privacy and data security are paramount issues. Whether it is the massive data breach at the federal Office of Personnel Management in 2014 or this year’s IRS leak of federal tax returns of many wealthy Americans, CUNA remains doubtful that such data will be safe and private. Credit unions and other financial institutions already churn out many federal tax information reporting forms. This new requirement further puts credit unions in the position of further policing their members and account holders. CUNA believes that better that better tax compliance can be achieved through other means such as the IRS using its existing audit authority. CUNA has significant concerns about this proposed new compliance burden.” (Credit Union National Association’s Jim Nussle, Letter to Mike Crapo, 7/26/2021)

The IRS Has A Long History Of Leaking Confidential Tax Information And Targeting Conservative Groups

The FBI Is Investigating Leaked Confidential IRS Tax Data To ProPublica

“The Federal Bureau of Investigation has opened an inquiry into the leak of personal income and tax data of some of the wealthiest Americans, a law enforcement source tells Fox News. The independent, nonprofit publication ProPublica last week published the tax liabilities and incomes of billionaires including Amazon’s Jeff Bezos, Tesla’s Elon Musk, and investor Warren Buffett, among others. The publication says it obtained thousands of tax returns for the country’s wealthiest individuals that span more than 15 years.” (“FBI Opens Investigation Into IRS Tax Data Leak,” Fox Business, 6/16/2021)

• “Word of the investigation comes two days after Senate Minority Leader Mitch McConnell and Republican Sens. Chuck Grassley and Mike Crapo demanded the Department of Justice and FBI to look into the leak. It is illegal to publish an unauthorized tax return.” (“FBI Opens Investigation Into IRS Tax Data Leak,” Fox Business, 6/16/2021)

In 2017, The Justice Department Reached A Settlement With Conservative Groups Over Accusations That The IRS Targeted The Groups’ Applications For Tax-Exempt Status

“The U.S. Justice Department has reached a settlement with dozens of conservative groups that claimed the Internal Revenue Service unfairly scrutinized them based on their political leanings when they sought a tax-exempt status, court documents showed. In a pair of lawsuits filed in federal court in 2013, the conservative groups accused the IRS of targeting organizations with such words as “Tea Party” or “patriots” when they applied to the agency for tax-exempt status starting in 2010. … The IRS admitted it was wrong when it based screenings of the groups’ applications on their names or policy positions, subjected the groups to heightened scrutiny and delays and demanded unnecessary information from the groups, the agreement in the Washington case said.” (“Justice Department Settles With Conservative Groups Over IRS Scrutiny,” Reuters, 10/26/2017)

• “Senior management within the IRS’s Exempt Organizations Division ‘was delinquent in its responsibility to provide effective control, guidance, and direction over the processing of applications for tax exempt status filed by Tea Party and other political advocacy organizations,’ the settlement document said.” (“Justice Department Settles With Conservative Groups Over IRS Scrutiny,” Reuters, 10/26/2017)

In 2014, The IRS Admitted Wrongdoing And Agreed To Pay A $50,000 Settlement For Leaking A Conservative Group’s Tax Information

“The IRS has admitted wrongdoing and agreed to pay a $50,000 settlement to a conservative group after confidential information from the group’s tax returns about its donors was published on the website of a political opponent. A federal court ordered the U.S. government to pay the settlement to the National Organization for Marriage, a group that opposes same-sex marriage. The group sued the IRS last year after tax information from a 2008 form was leaked and ended up being published in 2012 by the Human Rights Campaign, which supports gay rights.” (“IRS Agrees To $50,000 Settlement In Leaking Of Conservative Group's Donor Records,” Fox News, 6/24/2014)