Democratic lawmakers have said they plan to raise the threshold of President Joe Biden’s radical proposal that all bank transactions of more than $600 be reported to the Internal Revenue Service (IRS).
The initial proposal (pdf)—which Biden says is aimed at curbing tax evasion—would require banks and other financial institutions to report to the IRS any deposits or withdrawals totaling more than $600 annually to or from all business and personal accounts.
The new reporting requirement would take effect in 2022 and would apply to both private individual and commercial business accounts owned by a taxpayer.
But House Ways and Means Committee Chairman Richard Neal (D-Mass.) said on Sept. 23 that he and other Democratic leaders are planning to scrap the $600 annual figure and set a higher threshold, of which the details are still being worked through.
“We’ve reached an agreement to not have the $600,” Neal told Bloomberg. A Democratic aide noted that they’re focusing on increasing the current threshold to $10,000 but said that figure could well change.
Under the Bank Secrecy Act, U.S. financial institutions are currently mandated to report to the government all wire transfers over $10,000, as well as suspicious cash transactions, to prevent criminal activities such as money laundering.
However, Biden and Democratic allies in Congress claim the threshold needs to be lowered to close the “tax gap,” which is the difference between what current federal law requires to be collected by the government and how much actually goes into the Treasury.
The president has maintained that the new reporting rule will mean “the wealthy can no longer hide what they’re making and they can finally begin to pay their fair share of what they owe.”
“That isn’t about raising their taxes. It’s about the super-wealthy finally beginning to pay what they owe—what the existing tax code calls for—just like hardworking Americans do all over this country every Tax Day,” Biden said at a press conference on Sept. 16.
At that same conference, the president noted that 55 of the biggest and most profitable corporations in America paid no federal income taxes in 2020, on what amounted to $40 billion in profit.
“That’s not right. And my economic plan will change that. Not punish anybody, just make them pay their fair share,” he said.
Despite his reassurances, Biden’s new proposal has faced stiff opposition from banks as well as Republicans and some Democrats who are concerned that the move could see the IRS having access to too much of taxpayers’ personal data.