Bank president warns of knock-on effects from IRS overhaul
September 23, 2021
President Joe Biden last week thanked the U.S. House of Representatives for continuing its work to advance his economic plan, which includes new ways to ensure the super-rich are less able to evade paying taxes.
However, Andy Miller, President of Sundance State Bank, warns that these changes could have knock-on effects for both banks and the personal privacy of citizens.
“If passed, the proposal would essentially require banks to report data to the IRS for any account with at least $600 of inflows or outflows annually,” Miller explains.
Experts at the Treasury Office of Tax Analysis have estimated that the President’s initiatives would raise $700 billion in additional tax revenue over the next decade. On the other hand, as well as the burden on banks to report a considerable amount of extra information, this would provide the IRS with more personal data than ever before.
President Biden explained the proposal at a White House briefing on Friday, saying, “Big corporations and the super wealthy have to start paying their fair share of taxes. It’s long overdue.”
He went on to explain that, “Today, in this country, right now, the top 1%, for example, evade an estimated $160 billion in taxes that they owe each year. Not new taxes, taxes that they owe.”
The problem, according to the president, is that typical Americans receive a W-2 form each year and that information is also sent to the Internal Revenue Service (IRS), so a person’s taxes get deducted from their paycheck and they then pay any additional money owed.
“That’s why about 99% of working people pay the taxes they owe,” he said.
However, the very rich are often not employees themselves, so the IRS can’t see what they make and can’t tell if they’re cheating. When the IRS can verify taxpayer filings with third-party information reports, says a report from the U.S. Department of the Treasury, compliance rates exceed 95%, but when those reports are not available, compliance falls below 50%
However, Miller says the problem lies in how all this will be achieved. According to the President’s statement, the plan would be to ask for two pieces of information from the banks: the amount that comes into their bank accounts and the amount that goes out of their accounts.
“The administration’s fiscal 2022 budget proposal would require banks and other financial institutions to report to the IRS on the deposits and withdrawals of business and personal accounts,” says Miller.
Though originally associated with the American Families Plan, this change could be made as soon as next year.
“Congress is now quickly advancing this proposal in its budget reconciliation package, which needs only a simple majority to pass,” Miller says.
Miller is calling for the community to be aware of this pending legislation as he feels it could have a strong impact on individuals.
“At Sundance State Bank we are strongly opposed to this legislation coming from the administration in Washington as we believe it infringes on personal and business privacy,” he says. “We want people to know about this proposed legislation so they get a chance to have their voices heard.”