The federal government is proposing that banks and financial institutions report to them on any transactions that add up to or above $600.
This proposal is part of the Biden administration’s plan to rake in more tax dollars and reduce tax evasion and avoidance, especially among high-income earners.
But some financial institutions and advocacy groups disagree. They say it’s an overreach.
Executive Vice President for Congressional Relations and Strategy at the ICBA Paul Merski said it is an invasion of privacy.
“Most people have during the course of the year $10,000 or more going in and out of their accounts. Even minimum wage workers depositing their pay will have a flow of more than $10,000 coming in and out of their account so this is not going after millionaires or billionaires, this proposal is snooping on every American’s financial transactions,” Merski said.
Right now, financial institutions only report suspicious transactions to combat money laundering and criminal activities.
The proposal as of now will not compel banks to give specific details of transactions, but Merski says the IRS is powerful enough to “subpoena” them if necessary.
“The actual flow of money is sent to the IRS and the IRS can then turn around and subpoena for additional information from your bank account, garnish your bank account or freeze your bank account depending on what they are looking at,” he said.
Some banks in North Dakota have begun reaching out to customers to learn more about the proposal and take action.
President of the North Dakota Bankers Association Rick Clayburgh is discouraging panic withdrawals and is instead encouraging customers to reach out to their senators.
“Most importantly they should contact members of Congress. The last thing they should do is withdraw their money from the bank. At this point, this is not law. We are hoping that it will not become law and if Congress does pass it, right now, it will not begin until 2023 so there’s no reason to panic,” Clayburgh said.
If passed, the federal government says the tax reconciliation measure will rake in millions of dollars in revenue.
Clayburgh described the concepts as “strange” as he questioned how the government the proposal is “going to provide the extra tax dollars that they say they are going to receive out of this plan.”