Rep. Randy Feenstra (IA-04) joined Rep. Tom Emmer (MN-06) and his colleagues in sending a letter to House Speaker Nancy Pelosi, House Ways and Means Committee Chair Richard Neal (MA-01), Department of the Treasury Secretary Janet Yellen, and Internal Revenue Service (IRS) Commissioner Charles Rettig, urging them to abandon a proposal to add reporting requirement for community banks.
The plan would require financial institutions to report certain transaction-level data and information about outflows and inflows to the IRS on accounts over $600 every year. In their letter, members express concern that this proposal would impose significant compliance costs on community banks and also infringe on the privacy of millions of Americans.
“This IRS reporting requirement would place an unnecessary burden on community banks and main street businesses. It could also have negative implications for taxpayers concerned about the IRS and their ability to protect sensitive information,” said Rep. Feenstra. “That is why I have joined my colleagues in urging Treasury Secretary Yellen, IRS Commissioner Rettig, and others to scrap this plan which would place an undue burden on rural banks and their customers.”
Below is the full text of the letter:
We are concerned about a recent IRS data collection proposal to increase tax information reporting requirements on financial institutions, which we do not believe are necessary or helpful toward closing the “tax gap.”
The recent spending proposal to include new tax information reporting requirements for financial institutions would not only impose significant compliance costs on our banks, credit unions, and related financial institutions that have served as the backbone of this economy these past 18 months, but also infringe on the privacy of millions of Americans.
Specifically, such a proposal would require financial institutions and other financial services providers report information about the outflows and inflows on accounts over $600 to the IRS every year. However, financial institutions currently report a tremendous amount of data to the IRS, and no evidence has shown that the proposed requirements would substantially aid the
IRS’s efforts to close the tax gap beyond the information already at the IRS’s disposal.
Not only would such an overly comprehensive IRS database require significant resources to build, maintain, and protect, but it would make the personal, financial data of millions of Americans vulnerable to attack. Considering the IRS experiences 1.4 billion cyberattacks annually and has experienced multiple data breaches, we should not give this agency additional sensitive data to manage.
Additionally, privacy is one of the primary reasons individuals choose not to open bank accounts. This overreaching proposal, if adopted, would further exacerbate
We ask you to address our concerns as we work to craft a regulatory environment focused on protecting Americans and our financial system, not one focused on raising revenue at the expense of our taxpayers and financial institutions.