Senator Joe Manchin said on Tuesday that a deeply controversial proposal that would require banks to hand over the account information of most customers to the Tax service will likely be removed from the Democrats’ final tax and spending bill, even after the White House agreed to reduce the scope of the plan.
Manchin, a West Virginia Democrat who is a decisive 50-50 Senate vote, said he told President Biden at an Oval Office meeting that a plan would force banks to tell the IRS how much money goes in and out of individual accounts each. the year is “screwed up”. Biden would have agreed with that assessment, saying, “Joe is right about that,” Manchin said.
“So I think this one is going to go away,” Manchin said during an appearance at the Economic Club of Washington on Tuesday morning.
Under the new plan that Senate Democrats unveiled last week, banks, credit unions and other financial institutions would be required to report annually on accounts with deposits and withdrawals worth more than 10,000. $, rather than the $ 600 threshold originally proposed by President Biden.
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Even with a narrower scope, however, banks and other industry groups argued that the policy poses potential risks to customer financial privacy while increasing compliance costs for banks and adding to the already existing burden to which the sector is confronted to pass information to the government.
In a letter to Biden on Monday, nearly 100 banks and other industry groups called the higher reporting threshold “cosmetic changes” that haven’t really changed the essence of the bill; although the minimum amount that would trigger a report to the IRS on individual accounts is considerably higher, it will likely still include “Americans of all income levels,” the group argued.
“The privacy concerns of Americans who pay their taxes and who would be dragged into this reporting program are real and should not be taken lightly,” the letter said.
The tightening of the plan follows a constant lobbying campaign by banking groups and other industry organizations, in addition to a fierce pullback from Republican lawmakers who see it as the worst kind of government overshoot.
The White House has defended the plan on several occasions, writing in a note to Congressional Democrats that require banks and financial institutions to provide “some high level information” to the IRS on the flow of money. Accounts gives the agency more information on the incomes of wealthy Americans. investments and commercial activity. Recipients of federal benefits like Unemployment and Social Security would be exempt from the policy, which would also exclude any income received through a paycheck in which federal taxes are automatically deducted.
“This is a well-reasoned change: For American workers and retirees, the IRS already has information on the wage income and federal benefits they receive,” says a department fact sheet. of the Treasury on the changes.
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Banks are already required to report any individual transaction over $ 10,000 to the Financial Crimes Enforcement Network – as part of anti-money laundering requirements.
The Biden team stressed that banks will not have to report individual transactions to the IRS, but rather “high-level background information on account entries and exits” and that audit rates for Americans earning less than $ 400,000 a year would not increase.