While Sen. Joe ManchinJoe ManchinBriahna Joy Gray: Push toward major social spending amid pandemic was 'short-lived' Overnight Energy & Environment — Presented by Climate Power — Emissions heading toward pre-pandemic levels Biden discusses agenda with Schumer, Pelosi ahead of pivotal week MORE (D-W.Va.) has raised concerns about the $3.5 trillion price tag of budget-reconciliation legislation that Congress is set to take up this week, Americans are increasingly speaking out against a provision that would require banks to report their customers’ account information to the Internal Revenue Service.
The proposal — first laid out by the Treasury Department and set to be introduced during this week’s committee markups — is designed to close the “tax gap” between what American taxpayers pay and what they owe to help fund the spending bill. But the comprehensive, untargeted nature of the proposal is eliciting broad opposition not just from bankers who would be required to report the information to the IRS, but from the consumers they serve.
A poll commissioned by my organization — the Independent Community Bankers of America — and conducted by Morning Consult found that two-thirds of voters (67 percent) oppose the IRS collecting their bank account information. More than half (53 percent) of voters strongly oppose the plan, while only 22 percent support it.
Further, more than three in five voters (64 percent) do not trust the IRS to monitor their deposit and withdrawal information. And more than half (54 percent) do not trust the agency to keep their financial data safe from data breaches. This latter data point isn’t unexpected given the recent high-profile tax return leak the IRS is investigating as well as consumer anxiety over “math-error notices” triggered by stimulus payments.
The polling response indicates that consumers find IRS monitoring of their personal financial account transaction histories to be an invasion of privacy that is no business of the government. Consumers are also expressing concerns that the plan could potentially harm small businesses by increasing their tax liability.
What’s more, intrusive account reporting to the IRS could undermine Washington’s ongoing policy initiative of reducing the unbanked population. With distrust of institutions and government agencies inhibiting banking relationships — particularly among marginalized communities and those who have fled authoritarian regimes — indiscriminate financial account reporting risks increasing the challenge of reaching these individuals and families.
Instead of gathering heaps of new taxpayer information, consumers indicate they support closing the tax gap by making better use of the data the IRS already has. Similarly, a recent joint letter to congressional leaders from the International Franchise Association, National Federation of Independent Business, U.S. Chamber of Commerce, and other business groups advocates identifies less intrusive ways of closing the tax gap.
As the IRS proposal takes shape in Washington, community bankers will continue informing their customers of its potential impact while they continue to aid the economic recovery in their local communities.
Rebeca Romero Rainey is president and CEO of the Independent Community Bankers of America.