A provision is being proposed as part of the $3.5 trillion Build Back Better spending package that has the potential to change the rules for all banks and credit unions.
In addition, the proposed provision could potentially increase the amount of income taxes paid by the majority of all account holders, this according to John Heasley, the Vice President of Federal Affairs for the Texas Bankers Association.
“They [Congress] believe that there are large percentage of individuals who are not paying their fair share of taxes,” Heasley told KTSM, “The rhetoric is that they’re targeting millionaires and yet the proposal would bring that [new taxation] to potentially to 80 to 90% of account holders right now.”
The IRS measure would require banks and credit unions to report accounts to the IRS that have more than $600 a year in total deposits or withdraws. Heasley said that the provision does not line up with the ‘tax the rich’ messaging that’s being pushed by the Biden Administration,
“They have a very ambitions spending program in the Build Back Better initiative that is being pushed by the Biden Administration,” Heasley said, “The reason they’re doing that is that they believe that this can generate an additional $160 billion in additional funding for the government through the IRS. This is more than taxing the millionaires, this is a new source of revenue.”
Heasley added that this new provision applies to everyone including the working class and the middle class saying,
“What this language says that if even if you’re doing $25 a month in or out of your account you could end up qualifying for the reporting of this. So it would cover millions of account across the country.”
Last week, Speaker of the House Nancy Pelosi double downed on her intention to keep the provision in the spending package while speaking at her weekly news conference,
“I understand there is concern but if people are breaking the law and not paying their taxes one way to track them is through the banking measure,” Pelosi said.
The Texas Bankers Association along with many of the people who spoke to KTSM said they are also concerned with the privacy issue of the IRS having more access to their banking information.
“We strongly believe it is a violation of your [4th amendment ] rights as a customer. You have a reasonable expectation of privacy in your bank account,” Heasley asserted, “This proposal would require IRS to have a look at your aggregate in and out and they can compare that to your filing.”
Bob Pena, a resident of El Paso said he believes it is an invasion of privacy,
“It’s absurd, what a person does with their own money after they’ve paid their taxes is our affair.”
Another resident of El Paso agreed saying,
“I definitely do agree that it’s a way for the government to monitor the way you go about your business which I do not approve of, because unless you’re say going to another country and you have an excessive amount of cash or anything that is considered suspicious, then they really don’t have a reason to investigate you for it.”
Some residents told KTSM that they think the plan will actually backfire,
“It’s a strange bill. I think it will probably hurt the IRS more than anything because now I won’t go deposit money in my bank. I think government takes advantage of people in a lot of ways. I would say that it’s wrong. I wouldn’t vote for it.”
In addition, Heasley said that the Government will add thousands of new IRS employees to get the data they want.
“They want this data, they’ will set up a system, and by the way they’re getting thousand more employees to do the analysis. More than likely they’ll set up artificial intelligence or an algorithm to monitor individual accounts and compare that to what the filings are.”
Pena doesn’t understand why the government would want to expand the Internal Revenue Service or their monitoring purview,
“Now the big government is trying to get that. There’s just no reason for that except for a bigger bureaucracy. He [President Biden] is talking about doubling the size of the IRS. As it is people are having to worry about the IRS. What is it coming to? There’s no reason for this.”
Heasly is calling on people to get involved and contact their elected officials,
“We wish that the typical El Pasoan would engage on this issue because we think it’s an overreach and I think many citizens would call it an overreach as well.”
Heasley recommends heading to https://www.texasbankers.com/Search?SearchTerms=grassroots to find out how to get connected with your local lawmaker.
According to reports, because of the backlash received, a revised version of the proposal is expected to be announced which would require banks to report total annual deposits or withdrawals worth more than $10,000, rather than the $600 threshold.