Biden Plans to Draft Banks Into the Hunt for More Tax Money
The details on how President Joe Biden intends to pay for the $6 trillion in new spending he’s proposed are coming to light.
One of those details: requiring banks to report money flowing in and out of customer accounts – something financial institutions do not do today. The aim is to find out if people are making money, but not reporting it on their taxes…and then sending the IRS after them:
The proposal would require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirement would also extend to peer-to-peer payment services such as Venmo but wouldn’t require individuals and businesses to report any additional information to the government, according to people familiar with the plan. Financial institutions already must report interest, dividend and investment income, and the IRS can get bank information during audits.
As creepy as it is for government to dragoon banks into spying on their customers, there’s the very real problem with the data:
Knowing how much money came into and out of an account doesn’t by itself tell the IRS whether there is unreported income. People can receive nontaxable gifts or spend money on deductible business expenses, for example.
Rep. Kevin Brady (R., Texas), the top Republican on the House Ways and Means Committee, said the information-reporting plan sounds like a “dangerous overreach” and runs the risk of turning local banks into extensions of the IRS. “Many Americans will be very resistant to that,” he told reporters on Thursday. “I do think there are ways to improve information reporting that isn’t that intrusive.”
For the moment, the administration doesn’t seem to care about intrusiveness, privacy, or accountability. It just wants your money, and will give the IRS all the tools it needs to extract it.