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Under a new Biden administration proposal, the Internal Revenue Service is three times more likely to audit a citizen making less than $25,000 rather than someone in the top 1 percent of wealth.
The new proposal, which would require financial institutions to annually report customers’ account deposits and withdrawals at $600 or more, gives the IRS more leverage over those making less than $25,000, because they are more likely to have irregular income. Over the next decade, the reporting on more than 140 million bank accounts would raise an estimated $700 billion in tax revenue — which would cover social spending in the Reconciliation Bill.
Discussion of raising the threshold to $10,000 has not eased any tension. More than 40 banks urged lawmakers to vote against such a proposal in a letter addressed to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy. The banks warned against the mandatory collection of most Americans’ financial information “without proper explanation of how the IRS will store, protect, and use this enormous trove of personal financial information” could result a “tremendous liability”
“With all due respect, the plural of anecdote is not data,” Pelosi said. “Yes, there are concerns that some people have. But if people are breaking the law and not paying their taxes, one way to track them is through the banking measure.”
Currently, financial regulations already have banks and all financial institutions report interest, dividends, and investment income to the IRS. If suspicion is raised and leads to an audit, the IRS can acquire all personal bank information in that process.
Additionally, in a letter sent to President Biden and Treasury Secretary Janet Allen, Kansas Attorney General Derek Schmidt and 20 additional attorneys general voiced concern over the proposal, saying it is illegal overreach by the federal government and could cause unintended consequences.
Democrats look to pass the bill before the end of October, but if negotiations continue the bill could be overrun by the concern of the expiration of government funding on Dec. 3 with a debt default following.