Finance

Manchin objects to IRS bank-reporting proposal

Senate Energy and Natural Resources Committee Chairman Joe Manchin (D-W.Va.) speaks during a nomination hearing on Tuesday, October 19, 2021.
Greg Nash

Sen. Joe Manchin (D-W.Va.) on Tuesday criticized a proposal to increase the amount of information the IRS receives about bank accounts, saying he thinks it is unlikely to be included in Democrats’ social spending package.

“I think that one’s going to be gone,” Manchin said at an event hosted by The Economic Club of Washington, D.C.

Democrats are considering the IRS bank-reporting proposal as a way to raise revenue to finance their social spending measure. It would require banks to report to the IRS the total amount of money that came in and out of an account during a year.

The Biden administration initially called for the reporting requirement to apply to accounts with more than $600 in deposits and withdrawals in a year. Last week, congressional Democrats narrowed the scope of the proposal, raising the threshold to $10,000 and excluding wage income from that amount.

Key administration officials and Democratic lawmakers argue that the proposal would help the IRS enforce tax laws against wealthy tax cheats. But banks and Republicans have been intensely attacking the proposal, saying it raises privacy concerns.

Manchin said he shared his objections to the proposal in a meeting with President Biden. He indicated that he thinks the proposal is problematic even with a $10,000 threshold. 

Manchin said he told Biden, “Do you understand how messed up that is, to think that Uncle Sam is going to be watching?”

“I told him, I said, ‘Mr. President, I don’t know what happened. This cannot happen. It’s screwed up,'” Manchin added. The West Virginia Democrat said that Biden expressed support for his arguments.

The Hill has reached out to the White House about Manchin’s comments.

Manchin isn’t the only Democratic lawmaker to raise concerns about the IRS bank-reporting proposal in recent days.

Rep. Abigail Spanberger (D-Va.) said in a letter this week that she worries the proposal “might jeopardize my constituents’ rights to privacy without any clear tax law enforcement purpose.” She also expressed concern that small- and medium-sized financial institutions will face burdens in implementing the reporting requirement. 

She said raising the threshold to $10,000 “would certainly be a shift in the correct direction,” but wouldn’t full mitigate her apprehension. 

House Ways and Means Committee Chairman Richard Neal (D-Mass.) told reporters Tuesday that he thinks the IRS proposal should remain under discussion. He also said, “If Senator Manchin is going to go over the goal line with us, I think that we should be listening to some of what he has to say on it.”

Tags Abigail Spanberger Joe Biden Joe Manchin Richard Neal

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