U.S. Sen. Tommy Tuberville was in Birmingham Tuesday touting his legislation that would thwart a plan by the Biden administration and congressional Democrats to allow the Internal Revenue Service to monitor smaller bank transactions in order to prevent tax fraud.
A proposal under President Joe Biden’s “Build Back Better” taxing and spending plan would allow the IRS to monitor individual and business financial transactions of $600 or more. Currently, the Bank Secrecy Act requires financial institutions to report transactions of $10,000 or more.
Democrats and the Biden administration say the new rule is part of an enforcement effort that seeks to close the “tax gap” by collecting as much as $600 billion annually that goes unpaid. Tuberville and his Republican colleagues on Capitol Hill call it a government intrusion that will negatively impact people and banks.
At a news conference outside Protective Stadium, Tuberville was joined by leaders of the Alabama banking community to speak against the new rule and promote his legislation.
“This is something that’s going to be detrimental to our country and to our privacy,” Tuberville said. “This administration wants to weaponize the IRS more and more. They are already weaponized enough. They already have enough of our information.”
Tuberville’s bill, dubbed the Protecting Financial Privacy Act, would prohibit theIRS from requiring banks and credit unions to report customers’ transactions or account balances beyond current statutory requirements.
Alabama Daily News first reported on the issue in late September when it was still unclear how officials might proceed on the IRS proposal. Since then, top Democrats, including House Speaker Nancy Pelosi, have committed to moving forward with the plan.
“Yes, yes, yes, yes,” Pelosi said when asked Tuesday if she Democrats planned to include the IRS monitoring rule in the $3.5 trillion budget package.
“Yes, there are concerns that some people have,” she said. “But if people are breaking the law and not paying their taxes, one way to track them is through the banking measure. I think $600, but that’s a negotiation that will go on as to what the amount is. But yes.”
House Ways and Means Committee Chairman Richard Neal has also said the $600 threshold for IRS monitoring is the subject of negotiations.
Treasury Secretary Janet Yellen told CBS News that the proposal is being “misconstrued” and that it won’t allow the government to access individuals’ private information.
“There’s a lot of tax fraud and cheating that’s going on,” Yellen said. “All that’s involved in this proposal is a few aggregate numbers about bank accounts – the amount that was received in the course of a year, the amount that went out in the course of a year. If somebody reports an income of $10,000 and they had $3 million go out of their checking account, that tells the IRS that’s an individual you might audit.”
Scott Latham, president of the Alabama Bankers Association, joined Tuberville at the news conference and said his member institutions are up in arms about the IRS proposal and the impact it would have.
“The massive amount of data that will be collected and turned over to the government if this goes through is unimaginable and unprecedented,” Latham said. “Americans have a right to privacy, and the banking industry has an obligation to protect that privacy for our customers. We oppose this plan because it would undermine that relationship.”
Alabama Credit Union President Steve Swofford said the new IRS proposal would undermine trust in banking among populations that the government has sought to increase banking activity with, including rural Americans, those with low incomes and minorities.
“We’re hearing from our members that they don’t trust the government to gather this information. They are very uncomfortable with it,” he said. “Speaking for the credit unions, we have a lot of smaller institutions that already struggle to comply with the Bank Secrecy Act. This would just place a tremendous burden on our members and make it harder for us to serve customers.”
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