WASHINGTON — Sen. Joe Manchin, D-W.Va., on Tuesday predicted that the social spending bill negotiated by Democrats will not include a provision opposed by banks that would force them to submit new data to the Internal Revenue Service.
“I think that one is going to be gone,” said Manchin, criticizing the proposed measure that supporters say would help catch tax cheats but that banks say would be a compliance and privacy nightmare.
Manchin's comments to the Economic Club of Washington, D.C., signal hope for the industry's efforts to kill the IRS provision in the final reconciliation bill, although legislative talks over the spending package were still fluid as of early Tuesday.
The IRS reporting plan is seen as a centerpiece of the Biden administration’s push to crack down on tax evaders and raise revenue to pay for the Democratic social spending package.
The Treasury Department and others in the administration stress that the proposal is for wealthy taxpayers who have underreported business income. The latest version of the plan would require banks to report aggregate annual inflows and outflows in accounts where those money flows exceeded $10,000, sharply higher than a previously proposed threshold of $600. The measure would also exempt wage income paid via direct deposit.
While Manchin praised separate proposals to modernize the IRS, he appeared to agree with industry advocates and Republicans that the IRS reporting provision risked giving the government too much access to consumers' private finances.
“The IRS is going to be able to do the job that they should be doing, and they’re going to be able to modernize their computer systems and be able to do what they’re intended to do,” Manchin said. “They were never enabled to go into bank accounts to the point where every individual” would be affected.
The White House did not respond to a request for comment.
Manchin, a centrist Democrat
“The president and I had this conversation,” Manchin said. “I said, Mr. President, I don’t know who put this out and how it got screwed up, and they said, basically, we’re going to start looking at $600 transactions, even if it’s $10,000.”
“And I said, do you understand how messed up that is?” Manchin continued. “To think that Uncle Sam’s going to be watching, and what it does for bankers and this and that? I told him, I said, Mr. President, I don’t know what happened. This cannot happen.”
Manchin’s complaints echo concerns raised by banks and Republicans in recent months alleging that the IRS plan would allow government agents to review consumers' individual transactions — an idea that Treasury Department officials have called “
"We share Senator Manchin's view that the bank reporting proposal is 'screwed up,' and we are encouraged that an increasing number of lawmakers are responding to their constituents by opposing this misguided fishing expedition," said a spokesperson for the American Bankers Association. "The IRS has more targeted tools to close the tax gap."
Last week, Senate Democrats said they had
