Got more than $600 in the bank? The IRS wants the OK to snoop on you
Opinion: The Biden administration wants to use an enormous data grab to identify unreported taxable income. It'll come at a cost for all of us.
Credit unions in Arizona are opposed to an item being considered as part of the proposed $3.5 trillion reconciliation bill. In fact, anyone with a bank or credit union account has good reason to be worked up.
The bill may include a provision requiring financial institutions to report to the IRS the account transactions (deposits or withdrawals) of accounts that hold more than $600.
In Arizona, that'd be an overwhelming majority of 1.6 million members of credit unions and millions more with accounts at banks.
What does this mean for you, the consumer? An invasion of your privacy and potential additional taxes. This proposed fishing expedition is bad for consumers.
IRS says it wants this data to raise revenue
The proposal stipulates that if your account balance is above $600 at any given time, your financial institution will be required to track your transactions and report them to the IRS using an enhanced annual IRS Form 1099-INT.
Whereas the Form 1099-INT reports taxable activity, this new reporting requirement would not reflect any taxable activity. Instead, what the Biden administration hopes the IRS would be able to do is to use this enormous data grab to identify unreported taxable income.
But it’s not clear how the IRS will use this data to accomplish its goal. Further, the federal government’s history of keeping this type of data secure is dubious at best.
It fundamentally changes the nature of the information that your financial institution is required to report on you and forces your financial institution to provide the government with information that does not reflect taxable activity.
The Treasury Department and IRS have both stated this is a method for them to raise revenue.
As Fox Business News recently reported, “The White House has estimated the policy, which would apply to bank, loan and investment accounts, could generate about $463 billion in additional revenue over the next decade.
“The measure, if Congress approves it to fund Biden’s sweeping $3.5 trillion family and climate change plan, would give the IRS an enormous amount of new information that it would have to learn how to manage and use.”
It's a huge overreach, especially for your privacy
The privacy of our members is just one of a multitude of reasons we are opposed to this measure.
For financial institutions to comply with this requirement, there would also be significant regulatory burdens added to their operations. This would likely require them to invest in updating software, add and train staff on new procedures, manage complaints regarding the requirement to turn this information over to the government, and take other actions.
All of this will come at a cost to members and customers.
Additionally, there is the potential for security breaches of consumers’ personal data. The IRS is one of several government systems that has recently experienced a data breach. Financial institutions are highly concerned about the government’s ability to keep your data secure.
We ask you to contact your Congress representative and tell them to oppose this measure.
Congress should not approve the IRS to have access to your personal financial transactions in a blatant attempt tax you unnecessarily.
This is an epic overreach. Make your voice heard. Your privacy and money are at stake.
Scott Earl is president and CEO of the Mountain West Credit Union Association, representing credit unions in Colorado, Wyoming and Arizona, which has 1.6 million credit union members. Reach him at firstname.lastname@example.org.