Local bank opposed to proposed IRS reporting procedure
If community bankers weren’t busy enough continuing their heroic economic response to the pandemic, a recent proposal included in the 2022 budget proposal to impose new IRS reporting mandates on customer bank accounts has become a major advocacy priority.
To counter the plan, community bankers and their customers should weigh in directly with their members of Congress to voice their opposition.
The proposal would require financial institutions to report to the IRS on the deposits and withdrawals of business and personal accounts. This proposal would
• Constitute a broad, unwarranted infringement on the privacy of all bank customers without grounds to suspect tax evasion.
• Be intrusive and indiscriminate.
• Undermine the goal of reducing the unbanked.
• Increase taxpayer complexity and confusion.
• Overwhelm the IRS with personal financial data and increase risk of data breach.
Specifically, the proposed fiscal 2022 budget would require banks and other financial institutions to report to the IRS on the deposits and withdrawals of all business and personal accounts with a de minimis exception for accounts with a balance of less than $600.
The American Banking Association (ABA), the Independent Community Bankers Association (ICBA) and many other consumer advocates have strongly objected to the proposal, which would be an unwarranted infringement on the privacy of bank customers and create complex new reporting burdens for all banks and especially community banks.
The new IRS bank account mining would be intrusive and indiscriminate for bank customers, would undermine the goal of bringing unbanked Americans into the banking system, could increase taxpayer complexity and confusion, would enlist community banks as agents of the IRS while imposing new reporting burdens, would expose banks to penalties for inadvertent errors, and would channel more information into the IRS than it can process. Instead of a fishing expedition that infringes on the privacy of bank customers and occupies resources that could otherwise be focused on serving local communities, the ICBA is urging the IRS to close the tax gap with data it already has.
According to an ICBA poll conducted by Morning Consult, Two-thirds of voters (67 percent) oppose this proposal. Opposition to this IRS proposal is bipartisan and strenuous, with more than half of voters (53 percent) strongly opposed and only 22 percent supportive.
“We encourage all of our customers to contact their Senators and Representatives to let them know that they don’t want this proposal included in any proposed legislation,” said Dianna Lee, Marketing & Public Relations Officer for Troy Bank & Trust. “There are already reporting regulations in place, not to mention what an invasion of privacy this is. If this legislation passes, we will be forced to report every transaction coming into an account or going out of an account, personal or commercial, if that account has a balance of over $600.”
Lee encourages account holders at all financial institutions to make their voices heard and to let lawmakers know that there is strong opposition to this proposed legislation. To make your voice heard by policymakers or learn more about this proposal, visit www.banklocally.org/privacy. We value your business and privacy and want to make sure you have all the information you need regarding your finances and your money.