WASHINGTON (WZTV) — A Republican lawmaker says a proposal in President Joe Biden's reconciliation package which would force banks to report annual transactions over $600 to the Internal Revenue Service is "useless" and an "invasion of Americans' privacy."
Rep. Jefferson Van Drew, R-N.J., filed H.R. 5475 last week, otherwise known as the Banking Privacy Act of 2021. The bill would block a proposal in Biden's package which would force financial institutions to report annual gross deposits and debits from business and personal accounts with a threshold of $600.
A U.S. Treasury report summarizing the proposal cites the tax gap between what is owed compared to what is actually paid in taxes as a reason for the proposal's intention to improve tax compliance. The proposal states, "The tax gap for business income (outside of large corporations) from the most recently published Internal Revenue Service (IRS) estimates is $166 billion a year. The scale of this revenue loss is driven primarily by the lack of comprehensive information reporting and the resulting difficulty identifying noncompliance outside of an audit. While the net misreporting percentage is only 5 percent for income subject to substantial information reporting, the net misreporting percentage for certain categories of business income exceeds 50 percent."
The proposal doesn't state if individual transactions or names will be reported but it will show breakdowns of the inflows and outflows.
"The annual return will report gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner. This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts,2 with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600."
Van Drew's bill would negate this section of the bill, presuming it is adopted and the bill is passed. In a statement, Van Drew says he believes it wouldn't help close the tax gap and is "clear government overreach."
"This useless proposal by the Administration is an invasion of Americans' privacy rights and allows the government to have expanded access to individuals sensitive bank information," said Van Drew.
The statement adds, "there is no reason why citizens' personal transactions over $600 should be reported to the IRS. The average rent in the United States surpasses that amount. The vast majority of Americans are law-abiding taxpayers and we, as members of Congress, should be treating them as such. The Administration should be focused on policies that better the lives of our people rather than attempt to track their personal spending."
See the full Treasury Summary document explaining the proposal below or CLICK HERE: