WASHINGTON — Dozens of trade groups representing banks and other industries urged the White House to dump a plan that would require financial institutions to report new customer account information to the IRS.
The proposal, which lawmakers are considering to boost tax revenue and help pay for the Biden administration's social spending package, would direct banks to report annual customer inflows and outflows in accounts where such money flows exceeded $10,000.
The administration argues the plan could raise hundreds of billions by helping the IRS better identify tax evaders, while banks and Republicans have lined up in opposition, citing compliance costs and privacy concerns.
In a letter Monday, bank advocates and a widening coalition of other business trade associations appealed directly to President Biden.
“Our member companies understand that this proposal is a good-faith attempt by your administration to ensure all taxpayers meet their tax obligations, and we strongly support that goal,” the coalition of 99 trade groups — including the American Bankers Association, Independent Community Bankers of America and Consumer Bankers Association — said in the letter. “However, our members, and the American people, believe that they have a reasonable right to privacy.”
They added that the scope of the administration’s current approach appears “disconnected from its purported narrow purpose of focusing government scrutiny on Americans with actual income above $400,000.”
Last week, the Treasury Department and congressional allies revised the plan in response to criticism that the original proposal — which would have set an account flow reporting threshold at just $600 — was too sweeping.
Senate Democrats announced that a modified plan would bump the threshold up to $10,000 and exempt wage income via direct deposit.
But the trade associations said in their letter that those changes were merely “cosmetic,” arguing that the core of the proposal’s problems had not been addressed.
“As we have stated in several previous letters, these changes fail to address the reality that any program based on gross annual inflows and outflows will impact Americans from all income levels,” the organizations wrote. “Even with the proposed exclusions of certain types of income, a large number of common and totally innocent transactions by individuals and small businesses will be captured by this new regime.”
The Treasury Department has continued to push hard for the plan to be included in Democrats' social spending bill. Last week, a senior Treasury official
