Banks call into question a $600 tax disclosure proposal

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Banks call into question a $600 tax disclosure proposal

America s biggest financial institutions and banks are calling into question after congressional leaders suggested watering down the proposal that will allow the Internal Revenue Service to surveil bank transactions for as little as $600.

The current reports highlight avenues that Congressional leaders are looking to soften the edges of the new regime by exempting some payments processors, providing support to institutions to aid processing or carving out certain types of flows all together i.e. wrote the American Banks Association along with 100 financial groups in a letter to House Speaker Nancy Pelosi, Sen. Chuck Schumer and Rep. Kevin McCarthy.

These new proposed exceptions only add significant operational complexity to financial institutions and will not materially reduce the tens of millions of American taxpayers who would be subjected to the new reporting regime. Please continue to urge members to oppose any attempts to advance this new reporting regime, read the letter.

One mild angle floated is bumping the threshold from $600 to $10,000 – a move described by the ABA as a flawed assumption. The letter that also included support from the likes of the mortgage bankers association and the Consumer Bankers Association warned the move would increase tax preparation costs for individuals and small businesses while wreaking havoc on the back office.

As fierce opposition for the proposal mounts, the U.S. Treasury Department doubled down on its support of expand IRS powers.

Natasha Sarin, Treasury's deputy assistant secretary of economic policy, said in a memo that the proposal has been marred by misinformation, as opponents have raised the pernicious myth that banks will have to report all individual customers' transactions to the IRS.