Democrats to raise cap on Biden’s IRS transaction data proposal
The Democrats plan to revise President Joe Biden's proposal that all banking transactions in excess of $ 600 be reported to the IRS, as banks and data protection officers have opposed the plan.
The original proposal was for banks to report all account inflows and outflows of over $ 600 to the IRA in order to fight tax fraud and increase revenue for the Democrats' billion dollar infrastructure and social spending package. Now House Ways and Means Chairman Richard Neal says the Democrats have agreed to raise that threshold.
"We agreed not to have the $ 600," said Neal on Thursday, according to Bloomberg.
While the Democrats are still working on the details, they are reportedly aiming for a $ 10,000 threshold. This corresponds to the amount that the Federal Government is already monitoring through the Ministry of Finance.
THIS IS THE HOUSE DEMOCRATS 'MULTI-TRILLION DOLLAR INFRASTRUCTURE AND SOCIAL SPENDING PACKAGE
Banks are currently required to file currency transaction reports on all deposits in excess of $ 10,000 with the Financial Crimes Enforcement Network, a division of the Treasury Department. The FinCEN prevents money laundering and crime, but does not monitor the reports for tax reasons.
Banks and credit unions fear, however, that Biden's proposal to report all transactions over $ 600 to the IRS would be too burdensome and take up crucial time and money.
"From a banking perspective, the administrative challenges and complexities of a $ 600 annual threshold may not meet policy goals of reducing tax avoidance," said Scott Talbott, senior vice president of government relations for the Electronic Transactions Association. "At $ 600, the juice may not be worth it."
There are privacy concerns too, especially given that a threshold of just the proposed $ 600 would appeal to almost everyone. More than 140 Republican lawmakers sent letters to Neal, House Speaker Nancy Pelosi, Treasury Secretary Janet Yellen, and IRS Commissioner Charles Rettig rejecting the idea.
"Such an overly extensive IRS database would not only require significant resources to build, maintain, and protect, but would also leave the personal financial information of millions of Americans vulnerable to attack," the letter said.
Part of the Democrats' plan to fund their spending package is to provide the IRS with billions of dollars to improve tax enforcement and work to close the massive tax gap in the country that compares to the total amount of taxes owed to the taxes actually collected.
Republicans have resisted giving the IRS more power and funding, especially in light of the ProPublica tax leaks earlier this year when thousands of pages of classified tax documents relating to the country's richest people were leaked to the media . Despite an investigation, no one was charged with the massive leak.
Biden's $ 600 threshold should generate sales of nearly $ 500 billion over the next decade, although it is unclear what the revised proposal's sales outlook is likely to be.
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The Democrats are threading the needle with the spending package, which will go through a budget balancing process that avoids a Republican filibuster and only needs a simple majority to pass. Democrats cannot afford to lose a single vote in the Senate and can only dispense with a few votes in the House of Representatives, which means that the party's centrists have overwhelming power in the negotiations.
Other measures proposed by Biden have already been reduced from their original levels. Biden's corporate tax pitch of 28% is now 26.5%, and a plan to nearly double the capital gains ratio for the highest earners also turned out to be lower than proposed.
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Tags: News, IRS, Congress, Taxes, Finance and Banking, Biden Administration
Original author: Zachary Halaschak
Original location: Democrats raise cap on Biden's proposal for IRS transactional data
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