The proposal would require financial institutions and other financial services providers to track and submit information on the inflows and outflows of every account above a de minimis threshold of $10,000 during the year.
Last week, the Big “I" joined a number of organizations in sending a letter to congressional leadership opposing a proposal under consideration as part of the Democratic party's reconciliation package to establish an expansive new tax information reporting regime. If implemented, it would impact almost every American and small business with an account at a financial institution.
The original proposal would have required financial institutions and other providers of financial services to track and submit information on the inflows and outflows of every account above a de minimis threshold of $600 during the year, including breakdowns for cash, to the IRS.
However, this week, in the face of fierce opposition from both banks and small business organizations, such as the Big “I," congressional Democrats and the Biden administration made clear their intentions to scale back the provision so that banks would only be required to provide data on accounts with total annual deposits or withdrawals worth more than $10,000, rather than the $600 threshold that was initially proposed.
Even with these changes, the Big “I" remains opposed to the proposal as it would still create serious financial privacy concerns, increase tax preparation costs for individuals and small businesses, and create significant operational challenges for financial institutions. While the provision aims to help the IRS target wealthy tax dodgers, the unintended consequence of this proposal will still impact almost every American and small business with an account at a financial institution.
As congressional Democrats push forward with this overly broad proposal, the Big “I" will continue to advocate on behalf of its members and object to this IRS reporting requirement unless additional changes are made to limit its scope.
Wyatt Stewart is Big “I" assistant vice president of federal government affairs.