Report: Biden’s IRS Bank Rule Could Lead to Unprecedented Taxpayer Abuse

The Biden administration's bank account reporting rule could be even worse than you realize.

The requirement would force financial institutions to report their customers' annual transactions above $600 to the IRS. Supporters argue that the proposal will allow the IRS to crack down on tax cheats. Moreover, they claim that raising revenue will pay for the trillions in new spending under the reconciliation bill.

However, many Americans consider the idea an invasion of privacy. They fear new abuses of power if the administration expands the IRS' funding and power. This becomes an increasingly salient point upon learning a recent U.S. Treasury Inspector General for Tax Administration (TIGTA) report found numerous cases where the IRS violated taxpayers' due process, failed to disclose pertinent information and issued excessive fines in violation of the Eighth Amendment.

Per Americans for Tax Reform:

The IRS Criminal Investigation Division (IRS-CI) regularly violated taxpayers' rights and skirted or ignored due process requirements when investigating taxpayers for allegedly violating the $10,000 currency transaction reporting requirements, according to a 2017 report by the Treasury Inspector General for Tax Administration (TIGTA). In addition, less than one in ten investigations uncovered violations of tax law.

Taxpayer Privacy Threatened?

These findings should be alarming to taxpayers given that President Biden has proposed creating a new comprehensive financial account information reporting regime which would force the disclosure of any business or personal account that exceeds $600. Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal.

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Instead of establishing tax crimes, it appears that many of these investigations were merely IRS-CI fishing expeditions.

Businesses that dealt with a high number of currency transactions, such as retail, wholesale, service, automobile, restaurant, and gas stations were the primary targets for seizures. This involved the seizing of deposits into a bank account and blocking withdrawals from a bank account, which would likely have disrupted owners' ability to run their business.

Higher Prices, Less Pay

Besides the reality that the IRS-CI has only found a small number of taxpayers they investigated guilty of wrongdoing, financial services industry organizations doubt the agency could keep this vast collection of data safe. Unfortunately, this isn't an unreasonable fear. In 2015, hackers logged on to the IRS' website and left with “millions of dollars in fraudulent refunds” after stealing the personal information of hundreds of thousands of taxpayers.

Industry trade groups also worry about the operational challenges banks will have to grapple with from creating elaborate and expensive reporting tools. Those costs will inevitably be passed on to their customers.

Indeed, other businesses will pass on the expenses incurred by higher corporate tax rates in the form of rising prices for consumer goods and diminishing wages for employees.

While Democrats claim to only target wealthy Americans who don't pay their “fair share,” their proposal goes after countless families making less than $400,000 a year. Even the center-left Tax Policy Center calculated that Biden's $3.5 trillion budget would quickly lead to higher taxes for over two-thirds of middle-income earners. By 2031, the percentage of median income households paying more to Uncle Sam increases to 95%.

Less than one year into the Biden administration, millions of citizens across our great nation face inflation concerns that already threaten their American dreams. Let's not let the administration and Congress make things worse.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.