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WASHINGTON – The Biden administration has proposed implementing a bank account surveillance regime as part of its “Build Back Better” plan, requiring banks and other financial institutions to provide the IRS details on their customers’ data for accounts with deposits or withdrawals worth more than $600. Congressman Brad Wenstrup (R-Ohio) joined Congressman Drew Ferguson (R-Ga.) and 88 of his colleagues in introducing the Prohibiting IRS Financial Surveillance Act, which would ban the Internal Revenue Service (IRS) from implementing any new reporting requirements for banks or other financial institutions as part of the Biden administration's aggressive bank surveillance regime.
“There is no reason that the IRS should be permitted to spy on every American’s bank account. I have grave concerns about what impact this provision in President Biden’s so-called ‘Build Back Better’ agenda would have on our privacy and liberty,” said Congressman Wenstrup. “We’ve seen enough examples of the IRS targeting private individuals for political reasons to know that this is a dangerous proposal. Americans should be outraged, and I am proud to cosponsor this unfortunately necessary legislation to protect their financial privacy.”
Congressman Wenstrup also joined House Ways & Means Committee Republican Leader Kevin Brady in sending a letter to Treasury Secretary Janet Yellen demanding answers regarding the projected impact the bank account surveillance provisions would have on American farmers, families, and small businesses. You can read that letter here:
October 18, 2021
The Honorable Janet L. Yellen
Secretary of the Treasury
U.S. Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, D.C. 20220
Dear Secretary Yellen:
We write to express serious privacy concerns over the Biden Administration’s controversial proposal to surveil American’s private bank transactions. We are skeptical of the need for this dangerous expansion of IRS oversight into the daily lives of Americans, have reason to believe the true targets are farmers, families, and small businesses, and question the IRS’s capacity to protect this unprecedented amount of personal banking information. We recognize that even $10,000 de minimis annual threshold would sweep up the bank information of nearly every American with a job. The Administration’s proposal has rightly been criticized for its near-universal scope, its significant risk to individual privacy, and its dangerous empowerment of the Internal Revenue Service (IRS). Given inconsistent messaging surrounding the proposal we are seeking clarification from the Administration regarding the scope and impact of the bank surveillance scheme it is proposing.
The Department of the Treasury’s General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals (“Green Book”) describes the reporting requirement, or the “Comprehensive Financial Account Reporting,” as follows:
This proposal would create a comprehensive financial account information reporting regime. Financial institutions would report data on financial accounts in an information return. The annual return will report gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner. This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600.
The Administration’s Green Book proposal requiring financial institutions to provide detailed breakdowns of cash-on-hand, foreign transactions, and transfers to and from accounts, is clearly inconsistent with subsequent explanations of the reporting requirement. For instance, before the Ways and Means Committee on June 17, 2021, you described the proposal as providing the IRS with “just additional two pieces of information,” from financial institutions. Later, before the Senate Banking, Housing, and Urban Affairs Committee on September 28, 2021, you stated:
This is not a proposal to provide detailed transaction-level data by banks to the IRS. It is a proposal to add two additional pieces of easily ascertained information on to the 1099-INT form that banks already file, namely the aggregate inflows into the account during the year and the aggregate outflows.
Despite your statements that the Administration is not seeking transaction-level data from individual and business accounts, even Democrats in Congress have proposed to narrow the scope of the Administration’s reporting regime, including by increasing the de minimis threshold to $10,000. Meanwhile, the Administration has doubled down on its need to monitor bank accounts. In September, Acting Assistant Secretary for Tax Mark Mazur detailed the Administration’s proposals for mandatory IRS funding and bank account surveillance stating, “both components of the plan are essential,” in order “to truly overhaul tax administration.” In the same memo, however, Mazur also indicated a higher de minimis threshold will result in a lower potential revenue from enforcement from the Administration’s proposed threshold.
Finally, we are concerned about the IRS’s capacity to safely and efficiently utilize private personal and business bank account information of individuals, particularly after the recent criminal leak of private tax return data of U.S. citizens to ProPublica. Even assuming the IRS can properly safeguard private bank account information, the Treasury Department has indicated it will “take some time to implement [the information reporting proposal] and for the IRS to determine how best to deploy this new information.”
Given the magnitude of the Administration’s proposal and the significant, valid privacy concerns raised by individuals and businesses, we ask that you answer the following questions:
1. Can you confirm that the Administration is no longer proposing to collect any transaction-level data on personal and business bank accounts?
2. Can you confirm that the Administration will not seek transaction-level data on personal and business bank accounts in the future, including through future legislative proposals or through current or future regulatory authority?
3. Please identify which segment of the tax gap the bank surveillance data is intended to close and whether farmers and small businesses will be targeted using this information. If they will be targeted, what percentage of the revenue collected from the bank surveillance information is expected to come from farmers and small businesses?
4. Does the IRS have a plan for effectively utilizing information received from bank surveillance as a means to increase compliance in the absence of transaction-level data and an increase in the de minimis threshold above $600? If so, please provide us with that plan?
5. Is the IRS capable of safely utilizing any new bank surveillance data given data security and individual privacy concerns?
6. Has the Treasury Department conducted an analysis of the impact on its revenue estimates for the bank surveillance proposal if the de minimis threshold is raised to $10,000 or higher? If so, please provide us with that information.
7. Has the Administration evaluated alternative bases of authority to implement the bank surveillance scheme in the absence of proposed legislation, including existing law or regulatory authority?
Please provide answers to the questions underlined above by October 29, 2021. If you have any questions, please contact Rachel Kaldahl or Sean Clerget on the Ways and Means Oversight Subcommittee staff.
Sincerely,
Kevin Brady
Republican Leader
Committee on Ways and Means
Devin Nunes
Committee on Ways and Means
Vern Buchanan
Committee on Ways and Means
Adrian Smith
Committee on Ways and Means
Tom Reed
Committee on Ways and Means
Mike Kelly
Committee on Ways and Means
Jason Smith
Committee on Ways and Means
Tom Rice
Committee on Ways and Means
David Schweikert
Committee on Ways and Means
Jackie Walorski
Committee on Ways and Means
Darin LaHood
Committee on Ways and Means
Brad Wenstrup
Committee on Ways and Means
Jodey Arrington
Committee on Ways and Means
Drew Ferguson
Committee on Ways and Means
Ron Estes
Committee on Ways and Means
Lloyd Smucker
Committee on Ways and Means
Kevin Hern
Committee on Ways and Means
Carol Miller
Committee on Ways and Means
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