While the senator Joe manchinJoe ManchinManchin to vote against Biden’s vaccine mandate for big business Congress avoids shutdown after vaccine mandate fight Senate cuts deal to clear government funding bill MORE (DW.Va.) a raised concerns on the $ 3.5 trillion price tag of budget reconciliation legislation that Congress is about to take this weekAmericans are increasingly speaking out against a provision that would require banks to report their customers’ account information to the Internal Revenue Service.
Proposal – first arranged by the Treasury Department and should be introduced during this week’s committee markup – is designed to closing the “tax gap” between what U.S. taxpayers pay and what they owe to help fund the spending bill. But the comprehensive, untargeted nature of the proposal has met with broad opposition not only from bankers who would be required to report information to the IRS, but also from the consumers they serve.
A poll commissioned by my organization – the Independent Community Bankers of America – and conducted by Morning Consult found that two-thirds of voters (67%) oppose the IRS having their bank account information collected. More than half (53%) of voters strongly oppose the plan, while only 22% support it.
Additionally, more than three in five voters (64%) do not trust the IRS to monitor their deposit and withdrawal information. And more than half (54%) don’t trust the agency to protect their financial data from data breaches. This last data point is not unexpected given the recent leaked tax return the IRS is investigating as well as consumer anxiety regarding “Math error notifications” triggered by stimulus payments.
The survey response indicates that consumers find the IRS’s monitoring of their personal financial account transaction history to be a privacy breach that is not the business of the government. Consumers are also concerned that the plan will hurt small businesses by increasing their taxes payable.
Additionally, intrusive reporting to the IRS could undermine Washington’s ongoing political initiative to reduce the unbanked population. Distrust of government institutions and agencies preventing banking relationships – especially among marginalized communities and those who have fled authoritarian regimes – blind reporting may increase the challenge of reaching these people and these families.
Instead of collecting piles of new taxpayer information, consumers are indicating they are supporting the reduction of the tax gap by making better use of the data the IRS already has. Likewise, a recent joint letter to congressional leaders of the International Franchise Association, the National Federation of Independent Businesses, the United States Chamber of Commerce and other legal groups, identifies less intrusive ways to close the tax gap .
As the IRS proposal takes shape in Washington, community bankers will continue to educate their clients on its potential impact while continuing to contribute to economic recovery in their local communities.
Rebeca Romero Rainey is President and CEO of the Independent Community Bankers of America.