From bank accounts to facial recognition, the IRS is digging into our personal data

IRS headquarters in Washington, D.C.
Greg Nash

The IRS has proposed a new face-scanning verification system requiring some taxpayers to submit biometric data from their phone or computer in order to access online accounts. 

This would be a clear violation of privacy and should be alarming given the IRS has proven it cannot keep taxpayer data safe. Just last year, ProPublica announced it had received the private tax returns of thousands of taxpayers covering 15 years.

This proposal has rightly drawn criticism from politicians on both sides of the aisle and the agency has even said it would consider other options.

However, this plan is part of a broader pattern by the left to increase the ability of the IRS to intrude into the lives of everyday Americans. While Democrats have said they want the wealthy and large corporations to pay “their fair share,” the proposals being pushed by President Biden and congressional Democrats would actually harm middle-class Americans and small businesses.

If Democrats have their way, the IRS will double in size with $80 billion in new funding and 87,000 new agents. The agency would receive $45 billion for enforcement activity which will fund 1.2 million more annual IRS audits. About half of which will hit households making less than $75,000. By comparison, the IRS will receive less than $2 billion for taxpayer services.

This will give the agency unprecedented reach into the lives of families and businesses to harass and audit taxpayers.

Already, the left has increased tax complexity for any self-employed American or those working as independent contractors or freelancers. This new requirement was passed into law through Biden’s $1.9 trillion COVID-19 relief package and reduced the threshold at which taxpayers had to file a 1099-K form from $20,000 in payments and 200 transactions to just $600 in total transactions.

This is a significant paperwork burden for Americans who earn money through these arrangements as well third-party processors. This will impact sharing economy workers, like Uber and Lyft drivers and workers in numerous professions like writers, musicians, photographers, tutors and journalists just to name a few.

The Biden administration also wants to have the IRS track the deposits and withdrawals of any bank account, investment account, and Venmo, Paypal, and CashApp if the account exceeds $600 in total transactions.

This proposal has been described as a “comprehensive financial account information reporting regime” and would allow the IRS to snoop on virtually every American.

In fact, according to an analysis by the Joint Committee on Taxation, this proposal would hit an estimated 87 million Americans earning less than $400,000 per year and could hit up to 134 million Americans under this income threshold.  

It would also violate taxpayer privacy and open taxpayers up to IRS harassment and abuse. This is not hypothetical — the IRS has violated similar reporting requirements to target taxpayers. According to a 2017 report by the U.S. Treasury Inspector General for Tax Administration (TIGTA), the IRS regularly violated taxpayers’ rights and skirted or ignored due process requirements when investigating taxpayers for allegedly violating existing $10,000 currency transaction reporting requirements which exist under the Bank Secrecy Act. 

TIGTA found that most of these investigations were fishing expeditions — just 8 percent of taxpayers investigated were found to have broken the law. Agents often failed to properly identify themselves, seized financial assets before ever having talked or consulted with investigated taxpayers, didn’t attempt to verify reasonable explanations investigated taxpayers offered.

This is not the only way Democrats want to monitor Americans — they also want to have the IRS study and implement a new government tax preparation system. This is just another way the left wants to consolidate and expand the power of the federal government — it would replace the existing system of voluntary compliance, where Americans are responsible for filling out their own tax returns, with a system where the government assesses and files taxes for Americans. It would create a strong conflict of interest as the government would have an incentive to overcharge or withhold information from taxpayers. It would also empower the IRS to collect even more personal information from taxpayers.

If the left has their way, the agency will have a significant amount of information on taxpayers. The agency will have biometric facial data of taxpayers. It will have information on the withdrawals and deposits of virtually every American and new information on independent contractors and freelancers. It will also take over tax preparation services — a responsibility that will see them collect significant amounts of new taxpayer data.

These many new responsibilities point to the true goal of congressional Democrats and President Biden: not targeting the “rich,” but expanding the size of the IRS and federal bureaucrats, allowing the agency to target middle-class taxpayers across the country.

Alex Hendrie is director of Tax Policy at Americans for Tax Reform.

Tags Americans for Tax Reform Biden Government Internal Revenue Service Joe Biden Tax Tax preparation in the United States Taxation in the United States

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