Crapo, Idahoans Highlight Concerns with IRS Bank Reporting Scheme
Participants discuss privacy, other concerns in roundtable discussion
BOISE--Idaho’s U.S. Senator Mike Crapo, Ranking Member of the Senate Finance Committee, joined Idaho leaders, concerned constituents, and business and financial leaders for a roundtable discussion on a proposal to create a reporting scheme where financial intermediaries report to the Internal Revenue Service (IRS) on customer deposits and withdrawals.
The Biden Administration and congressional Democrats are considering an $80 billion boost in IRS funding, and implementing a reporting dragnet under which local banks, credit unions and payment providers will essentially be turned into agents of the IRS, monitoring and reporting of inflows and outflows on deposits and withdrawals made in private accounts. This proposal raises a number of serious concerns regarding Americans’ privacy; data security; and a massive amount of paperwork and confusion for taxpayers and the IRS. In light of these proposals to massively expand the IRS with unprecedented amounts of mandatory funding, and the IRS’s continued abuses of taxpayer rights and privacy, Senator Crapo has introduced legislation to place important guardrails around and IRS funding to protect taxpayer rights and privacy, the TaxGap Reform and IRS Enforcement Act.
From the discussion:
U.S. Senator Mike Crapo, Idaho, Ranking Member of the Finance Committee
“I think this is the biggest violation of personal privacy that has ever even been proposed, let alone enacted, by the United States government, and it’s something that every American ought to be incredibly worried about.”
Idaho State Treasurer Julie A. Ellsworth
“It is an egregious overreach. It is essentially going to be a daily ongoing audit of every person who are law abiding citizens—at least give us the opportunity to be accused of something.”
Idaho State Controller Brandon Woolf
“One of the other big concerns I share as State Controller is the unintended consequences of what this may bring. For example, I fear for our financial institutions of what may happen if people choose to ‘unbank,’ and cybersecurity, which is a daily threat that we deal with constantly.”
Aaron Briggs, Financial Expert, Boise Wealth Management
“I feel those inflow and outflow boxes, without itemization on each purchase, leaves open to interpretation for the U.S. government and the IRS to decide what number they want tax on any account. The overarching thing, is they want to bring in more control and to get at peoples data or money. . . This is supposed to be for high net-worth individuals and billionaires, to make sure they’re not skirting the issue on paying taxes. One of the reasons they included the $600 or above account balance to be monitored, is so a billionaire or high net-worth individual can’t have multiple accounts to hide those assets. I’m sorry, but $600 on someone who is a high net-worth individual or billionaire; how many accounts are we talking about? That doesn’t seem like a good excuse to say that’s why the threshold is $600. Really, it is just an overreaching part of the government to monitor everybody’s accounts. I don’t think that should be what is done, and I have clients that feel the same way.”
Adam Lyman, ABCO Engineering, Nampa
“I spend tens of thousands of dollars preparing my taxes every year. It takes months and months to do this stuff just to comply with what the government requires. . . For people like me, an overregulating government is putting burdens on us that are restricting the amount of people I can help. The best I do every day is know people are paying mortgages because of my efforts. And this is just another way to keep me from doing that for people. It’s onerous, [and] it’s a violation of privacy. The government does not want me to [succeed], obviously. And this is just one more brick on the wall to stop me from being successful.”
Platt Thompson, Idaho entrepreneur
“This invasion of privacy with regard to our personal finances is particularly egregious; it’s beyond the pale that the government will be able to observe, mark and data mine all of my transactions. It is a horrific proposal for anyone who values personal privacy and more than that, personal freedom.”
Jessica Trawick, U.S. Air Force veteran, Rover independent contractor and Idaho entrepreneur
“I’m starting my own small business and me and people like me are trying to figure out the tax code and tax law and wondering why we are being targeted. This hits everyone. If the highest part of our population’s wealth is at the top, why is it independent contractors and low-level small businesses--growing people--being targeted? People within my small business groups feel we are being unfairly attacked in a system already designed to make it harder for us to get started.”
John Evans, Jr., President, D.L. Evans Bank
“The proposal would create a significant burden for small business, banking and credit unions. Bankers firmly believe that Americans should honor their tax obligations, but requiring banks and credit unions to report every single transaction is just ridiculous to be honest with you. Every inflow and outflow coming out of an account is reported. And as you mentioned, the IRS is a constant target of cyber criminals, and recently suffered significant data breaches. . . The regulatory burden for all of us is just unbelievable.”
Kent Oram, President and CEO, Idaho Central Credit Union
“The privacy overreach is astounding. And to imagine—you know, there is sometimes the way politics goes is we talk about $600 but then we follow what about $2,000 or what about some other number—well it doesn’t matter what number, it can be a penny or a million dollars, it doesn’t matter, it’s the same amount of work on America’s financial institutions to comply with something like this. . . This is a massive overreach and we oppose it.”
Deneen May, President for Western Idaho, Zions Bank
“We are deeply concerned that this proposal would put customer privacy and data security at risk. An unprecedented amount of taxpayer information such as payments on loans, transfer between a taxpayers various bank accounts, would be captured and recorded. This information would be massive and have little relevance to taxable income. Finally, the legislation would increase compliance cost to individuals and small business. The proposed in-flow and out-flow reporting appears to small millions of small business owners that operate as sole proprietorships will needless increase their tax preparations cost.”
Todd Erickson, President and CEO, CapEd Credit Union
“This is bad policy, it really is. We’ve got nearly 90,000 members, most of them are consumer accounts, and they look to us to provide banking services at a low cost to them and also a convenience for them so they can access their accounts. But the more regulation that comes to us, which is already heaped on the many reporting requirements we have already, consumer protection laws and everything else, is just all that compliance cost is filtered down to the consumer, to the member. They end up paying the cost for this. And for what purpose? So the government can spend more money and they can continue to tax the consumer and small businesses. . . From the banking and credit union’s perspective, a cybersecurity breach is not a matter of if, it is a matter of when. We spend a lot of money to protect the data of our consumers and our members. Once the data is within our house, we can protect it; if we send it out, it is out of our control; if it goes to the government and that data breach happens, our consumers will look to us as to why it happened.”
Charley Jones, Owner, Stinker Stations of Idaho
“It’s an amazing time in the U.S. I’ve never been afraid of Big Brother. But then I see this, and just my head spins. You can’t make this stuff up. I think this is probably proposed by somebody that’s never signed the front of a paycheck. I’ve had a business for over 50 years. [We] work hard every day to serve our customers, to be part of America, to be part of this fantastic country. And then we have bureaucrats who I guess think that we’re evil. And we’re not, we’re good people. And we work hard.”
The Administration and congressional Democrats’ proposed IRS financial institution reporting scheme raises a number of serious concerns:
- Privacy: Existing law protects the privacy of confidentiality of personal financial records, and the overwhelming majority of Americans honestly report and pay their tax liabilities. This proposal creates unnecessary additional scrutiny with no proven benefit.
- Data Security Concerns: The IRS has an extensive history of leaks, hacks and other violations of taxpayer confidentiality. This proposal would put additional troves of private taxpayer data at risk of future exposure.
- Low- and Middle-Income Earners Swept In: While proponents of the measure argue this bank-monitoring dragnet will focus on the “rich” or “billionaires” evading taxes, this scheme will capture everyone with an account at a bank, credit union, brokerage, Venmo, Paypal and more. This means individual private accounts, or those with business accounts such as plumbers, jewelers, small contractors, and more will be caught up in this scheme.
- Drowns Taxpayers and the IRS in a Sea of Information: The breadth of this proposed information reporting dragnet will result in a massive amount of paperwork and confusion for taxpayers and the IRS. Taxpayers will be juggling multiple additional forms, the IRS will be inundated with paper, and banks will bear increased compliance and reporting burdens on their customers.
Crapo is taking Idahoans’ concerns back to Washington, D.C. where he will continue to fight against the IRS proposal and Democrats’ upcoming reckless tax-and-spending plans.
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