By TODD STACY, Alabama Daily News
A new bill from U.S. Senator Tommy Tuberville would prohibit the Internal Revenue Service from requiring banks and credit unions to report customer transactions or account balances beyond current legal requirements.
Currently, bank secrecy law requires financial institutions to report transactions of $ 10,000 or more. A new proposal launched as part of President Joe Biden’s “Build Better” tax reform and spending would lower that threshold to just $ 600.
In an interview with the Alabama Daily News on Monday, Tuberville called the proposal “a scandalous intrusion by the government into people’s lives.”
âWe want everyone to pay their fair share. I have no problem with that. But I don’t want the âbig brotherâ federal government to harass private citizens. I don’t want them to harass the banks, âTuberville said before introducing his bill, dubbed the Financial Privacy Act.
However, given his status in the Senate minority and how difficult this makes passage of the bills, Tuberville’s real intention is to draw attention to the new tax proposal in the hope that public pressure will convince Democrats to reject it.
âMost people have no idea this is part of the Biden plan. So what we’re trying to do is get the information out to the American taxpayer, not just Republicans, but Democrats as well. It should be a bipartisan bill. I’m telling you, Democrats don’t want the IRS to be bigger than us.
Democrats negotiating the issue in Congress last week agreed to scale back the Biden IRS plan, according to Bloomberg News. House Ways and Means Committee chairman Richard Neal told the outlet he wanted to increase the reporting threshold by $ 600.
The IRS is quite intrusive as it is. This is something that Americans of all political stripes should agree on. pic.twitter.com/hWcjClQ9Bo
– Coach Tommy Tuberville (@SenTuberville) September 27, 2021
According to the Treasury Department, which oversees the IRS, the new reporting requirement is part of a larger proposal to close the “tax gap” by collecting taxes that individuals and businesses owe but do not pay. The Treasury estimates this total at $ 600 billion per year.
According to Assistant Under Secretary of the Treasury for Economic Policy Natasha Sarin, the new requirements for banks relate to the information they already have and would not impose a burden on taxpayers, “so the IRS can deploy these additional resources to audit more sophisticated tax evaders “.
In a September 7 report, Sarin estimated that the new reporting requirements would generate up to $ 480 billion in tax revenue over a decade.
âFor the IRS to properly enforce tax laws against high earners and large corporations, it needs funds to hire and train tax officers who can decipher their thousands of pages of sophisticated tax returns. He also needs access to information on opaque income streams, such as property and partnership income, which disproportionately flows to top earners, âSarin wrote.
Tuberville said the new IRS requirements will have the most negative impact on rural Americans and minorities by discouraging them from doing banking transactions for fear they will be followed by the government. He is also concerned about the impact of community banks and credit unions and the new costs that such a mandate would impose.
“That’s what concerns me: rural Alabama, âTuberville said. âYou know, it’s going to be a problem with rural banks because they can’t afford to hire staff to do it. “
Chris Latta, president of F&M Bank in Piedmont, Alabama agreed. He said he and others at small financial institutions will struggle with the costs of compliance, while the big banks could more likely absorb them.
âWe are a highly regulated industry, so we will be hiring auditors to make sure our systems are in place and our controls are in place so that everything is done correctly,â Latta told Alabama Daily News. âSo you can imagine the expense it will take to put a system in place in a process and procedures for something of this magnitude to make sure it’s done right. “
Latta is also concerned that customers are losing confidence in banking services due to a lack of confidentiality.
“I think that would push people out of the banking system, to be honest with you, just because they don’t want the government to know about all these transactions going on in their accounts.