President Joe Biden unveiled the framework for a $1.75 trillion economic and climate change plan on Thursday, but it did not include any mention of legislation that would require banks and financial institutions to report the total yearly amounts of inflows and outflows of accounts that meet a certain dollar threshold amount. The earliest proposal was to require the additional reporting if accounts had at least $600 worth of transactions each year, but that was met with stiff resistance. So, the proposal was revised—the threshold was raised to $10,000 and the plan excluded wage and salary earners, whose income is already reported to the IRS, and federal program beneficiaries, such as those receiving Social Security payments. The measure was seen as a way to help the IRS catch wealthy tax cheats and raise money to help pay for Biden’s spending plans. However, the financial services industry pushed back, saying the move would invade people’s privacy, give too much additional responsibility to the IRS—which they said already has a poor track record of safeguarding sensitive data—and cause undue hardships for financial institutions that would have to implement the change. Even though the proposal could still find its way back into the final bill, financial institutions are taking the win for now. “The decision by the administration and House leaders not to pursue the bank reporting proposal is a victory for consumers and small businesses,” the American Bankers Association said in a release late Thursday. “Americans should honor their tax obligations, but forcing financial institutions to share private financial data from millions of customers with the IRS was the wrong way to reduce the tax gap.” Requests for comment from Sens. Ron Wyden and Elizabeth Warren, who advocated for the provision, were not answered by the time of publication. Have a question, comment, or story to share? You can reach Medora at medoralee@thebalance.com.
