The Biden administration and House Speaker Nancy Pelosi (D-CA) want to give the Internal Revenue Service (IRS) access to the financial income data for millions of Americans and businesses. It's part of their plan to hunt down extra money to pay for President Biden's massive $3.5 trillion social spending plan.
Officials say if the IRS can see people's private bank information, they'll be able to determine who isn't paying their full taxes. They estimate the total in unpaid taxes amounts to more than $7 trillion.
The New York Times reports the administration wants banks to give the IRS new details on customers who have total annual deposits or withdrawals worth more than $600.
Financial institutions and Republicans are strongly objecting to the plan, saying the administration's attempt to grant this broad new power to the IRS is a monstrous breach of Americans' privacy as well as clear government overreach.
Bank customers have also let their voices be heard after receiving emails and phone calls from industry trade groups criticizing the administration's proposal.
Financial institutions from Denver to Philadelphia say they are being deluged with calls, emails, and in-person complaints from both savers and small-business owners worried about the proposal, according to the Times.
"We have heard a lot from our customers about their concerns about their privacy," said Jill Castilla, the chief executive of the one-branch Citizens Bank of Edmond, just outside Oklahoma City. "I've gotten calls, emails, and then we've had many customers come in."
Banks say their costs would rise if they had to make the extra effort to turn their client's information over to the IRS. Plus, it would be a compliance and privacy nightmare.
But Biden administration officials say the government needs more information from its citizens in order to hunt down Americans who do not pay their taxes.
More than $460 billion in additional revenue could allegedly be recovered in the next 10 years, according to government officials.
"This is a very serious policy proposal," Treasury Secretary Janet Yellen said at a congressional hearing last month. "We have a $7 trillion estimated tax gap that we have a great deal of tax avoidance by individuals and businesses — typically very high-net-worth, high-income individuals and businesses that have opaque sources of income that are not paying the taxes that are due."
However, the public outcry is causing the administration to take a second look at the proposal, possibly changing the required number to $10,000 rather than $600.
Banking industry trade groups have spearheaded the effort to sink the proposal. They have also created their own hashtag #KeepMyBankingPrivate.
Bankcda, one small bank in Coeur d'Alene, Idaho is keeping its customers aware of the proposal through social media.
"We proudly join @ICBA and others in telling Congress that we serve our customers, not the IRS. Join us and help us #KeepMyBankingPrivate," the bank recently tweeted.
— bankcda (@mybankcda) September 30, 2021
Lawmakers and state officials have also blasted Biden's IRS proposal.
West Virginia state treasurer Riley Moore told The Daily Mail that no state should comply with a Biden proposal to force banks to hand over transaction data over $600 to the IRS, which he describes as an "unconstitutional invasion."
"The impact this is going to have on community banks, this is like Dodd-Frank on steroids," he added.
Mike Harmon, the Kentucky auditor of public accounts, warned of potential abuse by the government agency, tweeting, "If the Biden proposal comes to fruition, the private banking activity of more than 100 million Americans could be subject to examination by the IRS, with no guardrails in place to protect potential abuse."
Calling the Biden administration's proposal "invasion of Americans' privacy," U.S. Rep. Jefferson Van Drew (R-NJ) filed HR 5475 also known as the Banking Privacy Act of 2021 earlier this month, according to WZTV.
The bill would block the administration's proposal to report annual gross deposits and debits from business and personal accounts, the station reported.
In a statement, Van Drew called Biden's proposal "clear government overreach."
"This useless proposal by the Administration is an invasion of Americans' privacy rights and allows the government to have expanded access to individuals sensitive bank information," he said.
In an op-ed, The Wall Street Journal's editorial board wrote, "On your next trip to the ATM, imagine that Uncle Sam is looking over your shoulder. As if your annual tax filing wasn't invasive enough, the Biden Administration would like a look at your checking account."
With the IRS planning to look at every American's account with a balance above the $600 threshold, a group of 41 industry groups recently warned congressional leaders that the plan "is not remotely targeted to detect major tax avoidance," the newspaper's board wrote. "It's also a privacy breach waiting to happen."
"Twenty-three state treasurers and auditors signed a letter last month opposing the plan, calling it 'one of the largest infringements of data privacy in our nation's history,'" the board noted.
The newspaper also pointed out that casting a wide net over Americans' personal finances has been a longstanding goal for Democrats and the political left.
"But the bigger threat of giving the IRS access to the details of your bank account is that politicians will eventually find a way to control how you save and spend your own money. This is a bad idea that deserves to die," the editorial board wrote.