The Biden administration continues to push for the IRS to be given new powers to automatically snoop and store the bank account information of virtually every American.
Today during a Senate Banking Committee Hearing, Treasury Secretary Janet Yellen reaffirmed her support for the proposed IRS reporting requirement, would give the IRS new power to automatically access bank account, Venmo, PayPal, and CashApp account inflows and outflows for all business and personal accounts.
This proposal is a clear priority for the Biden administration. Several weeks ago, Natasha Sarin, Deputy Assistant Secretary for Economic Policy at the U.S. Treasury Department, said that the Biden administration and congressional Democrats were still trying to insert IRS bank account snooping into the reconciliation bill.
During the hearing, Senator Tim Scott (R-S.C.) posed Yellen a question, asking if she still supported this provision:
“Can you tell the American people today, Secretary Yellen, whether you still support any form of the IRS bank reporting requirements your department proposed earlier this year, which would provide the IRS with currently undisclosed taxpayer information with the purpose of targeting, essentially, every single working American at minimum wage or higher?”
She replied, confirming that she did, in fact, still support it:
“I do support it. I think it’s important that the IRS have visibility into opaque income streams and that’s an important way to increase tax compliance.”
Sen. Tim Scott then asked why the threshold was so low, given the “intended” purpose of this provision is to target millionaire and billionaire tax cheats:
“If you’re looking to catch tax cheats, why in the world would you start with something as low as $600 and then revamp it to $10,000? Millionaires and billionaires are… certainly not making minimum wage.”
Strangely, Yellen then explains that the low threshold, $600, is meant to avoid wealthy tax evaders from opening multiple accounts:
“The low reporting requirement was meant to make evasion more difficult by opening multiple accounts.”
This seems unlikely, as if someone was trying to shield $1 million from the Dems’ IRS bank account surveillance with a $600 reporting requirement, they’d have to open 1,666 bank accounts. The idea that this low threshold, or anywhere near it, was designed to prevent wealthy tax evaders from creating multiple accounts is not credible.
In reality, Democrats know that the IRS will need tools to use against the middle class in order to raise the amount of money they claim the IRS will raise through increased funding.
Further, this reporting requirement would be a radical violation of privacy. This policy would give the federal government access to virtually every American’s account inflows and outflows. The proposal is not tailored nor targeted at all towards higher-income taxpayers or more “suspicious” behavior. Steven Rosenthal with the left-leaning Tax Policy Center explained that this reporting regime proposal would "bury the agency in a sea of unproductive information.” In fact, if a family's monthly expenses total just $833 a month, or about $200 a week, their bank information would be reported to the IRS.
Additionally, the IRS already abuses current reporting laws. The IRS Criminal Investigation Division (IRS-CI) regularly violated taxpayers’ rights and skirted or ignored due process requirements when investigating taxpayers for allegedly violating the existing $10,000 currency transaction reporting requirements, according to a 2017 report by the Treasury Inspector General for Tax Administration (TIGTA).
The report found numerous abuses – IRS agents often failed to properly identify themselves, seized financial assets before ever having talked or consulted with investigated taxpayers, didn’t attempt to verify reasonable explanations investigated taxpayers offered, and did not inform taxpayers of important information nor the purpose of interviews. The outcome of these cases was often determined by how willing a taxpayer was to engage in litigation against the government, rather than how severe the alleged offense was, a clear violation of the Eighth Amendment. To make matters worse, the vast majority of taxpayers targeted were innocent.
In October, Senator Tim Scott, with Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and Senate Banking Committee Ranking Member Pat Toomey (R-Penn.), introduced the “Prohibiting IRS Financial Surveillance Act,” which would bar the IRS from implementing this reporting regime.
Because Democrats have not given up on imposing this unpopular regime, this legislation is still vital.
The new IRS reporting regime would violate taxpayer privacy, open taxpayers up to IRS harassment and abuse, and subject low- and middle-income taxpayers to grueling audits.