Washington, D.C. – Today, Florida Congressman Daniel Webster (R-Clermont) and 201 of his colleagues sent a letter to Treasury Secretary Yellen reasserting their concerns with the Administration’s proposal to expand the data collected on Americans’ bank accounts.

“I have been adamantly opposed to this financial surveillance being pushed by President Biden,” said Rep. Webster. “This proposal would lead to a supercharged, overly powerful IRS with Orwellian ability to invade Americans’ privacy. Under the guise of catching fraud, the Biden Administration would force local banks to be agents of the IRS and report transactions such as parents making a college payment for their son or daughter or paying for a new roof to be installed on their home.”

The lawmakers wrote, “Your proposal, if enacted and regardless of the compliance threshold, will likely sow further distrust in our financial system due to the ongoing and valid concerns about the IRS’s ability to protect the privacy and financial data of the American people and potentially enlarge the unbanked population.”

Background:

On September 13th, Rep. Webster and 142 members of Congress wrote expressing concern with the Administration’s plan to require financial institutions and other financial services providers to report a range of new data points on accounts with annual gross inflows and outflows totaling more than $600 to the Internal Revenue Service (IRS).

Following that letter, the Department of Treasury responded on September 29th attempting to justify their actions as an effort to “close the tax gap”. However, they failed to address the privacy implications of their proposal. Recently, the Administration and the majorities in Congress have begun considering increasing the threshold from $600 to $10,000 (or an even higher amount). Arbitrarily increasing the threshold to $10,000, as most recently proposed, will still apply to individuals at every rung of the income ladder.

Click here for a copy of the letter sent today. Full text is below.

Dear Secretary Yellen:

On September 13th, 142 Members of Congress wrote to you expressing concern with the Administration’s proposal to significantly expand the amount of financial data collected on virtually every American. Since then, hundreds of thousands of our constituents have reached out to our offices – in addition to every state bank and credit union association, and many state financial officers – voicing their opposition to this initiative. Your Department’s response to these concerns was not only insincere, but it also demonstrated just how out-of-touch the proponents of this effort are with the grave and sincere concerns that millions of Americans have with this idea.

The Treasury Department’s initial plan sought to require financial institutions and other financial services providers to report a range of new data points on accounts with annual gross inflows and outflows totaling more than $600 to the Internal Revenue Service (IRS). After receiving pushback from Americans in every state, there have been reports that the Administration and the majorities in Congress are considering increasing the threshold from $600 to $10,000 (or an even higher amount).

The impact that these new reporting requirements will have on tens if not hundreds of millions of unsuspecting Americans cannot be emphasized enough. Arbitrarily increasing the threshold to $10,000, as most recently proposed, will still apply to individuals at every rung of the income ladder.

Further, your September 29th response cited enhanced transparency, improved tax compliance, and increased federal income as the main reasons for this proposal, while failing to substantively address one of our primary concerns: privacy protections. The IRS’s history when it comes to protecting Americans’ personal information is suspect at best. Not to mention, one of the foremost reasons so many Americans are unbanked is due to privacy concerns, according to a 2019 survey published by the FDIC.

Your proposal, if enacted and regardless of the compliance threshold, will likely sow further distrust in our financial system due to the ongoing and valid concerns about the IRS’s ability to protect the privacy and financial data of the American people and potentially enlarge the unbanked population.

Lastly, after a historic year when banks and credit unions were front and center, providing financial lifelines to families, businesses, and communities during the COVID-19 pandemic, we cannot emphasize strongly enough the negative impact that new and additional reporting requirements will have on these same financial institutions by your proposal. Financial institutions already report a tremendous amount of data to the IRS, and there is ample evidence to show that the IRS needs to do a better job using the information it already has to close the “tax gap.” The last thing our financial institutions need is another layer of administrative reporting requirements to take away from their daily efforts to provide the capital that is the lifeblood of Main Street America.

In light of our continuing concerns, and your inability to adequately address them, we ask you to abandon this proposal and encourage congressional Democrats to do the same. We must protect Americans and our financial system, not make them the victim of government overreach in the name of raising revenue.

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