Banks, consumer advocates unite against U.S. tax reporting proposal
Opposition is mounting to a Biden administration plan to require financial institutions to report customers’ account flow data to the Internal Revenue Service, with banks, credit unions and some consumer advocates warning it would be a massive invasion of consumer privacy.
The Treasury Department outlined a proposal in its recent budget request for a regime requiring banks and other financial institutions to report inflows and outflows in consumer accounts with more than $600. The goal is to crack down on tax evasion by high earners and narrow the so-called tax gap between what Americans pay and what they owe.
Financial institutions sounded the alarm over the new plan — meant to help the administration pay for the American Rescue Plan and infrastructure overhaul — before it was formally unveiled on May 20, noting the potential regulatory burden. But criticism has intensified from a broader array of stakeholders over concerns that consumers’ private information could be compromised.