Half of the Senate Republican Conference has urged Democrats to drop a proposal that would require banks to hand over some account information to the Internal Revenue Service.
"This proposal represents a radical departure from existing reporting requirements associated with national security and actual taxable events," 25 GOP senators said in a letter to Senate Majority Leader Chuck Schumer.
"Placing more requirements on financial institutions would not only adversely affect these institutions and their customers — who ultimately pay the price for compliance costs — but it would also inundate the IRS with layers of new paperwork and taxpayer data that is either redundant or irrelevant to improving federal tax compliance, as account inflows and outflows are not taxable events."
Pat Toomey, R-Pa., ranking member of the Senate Banking, Housing, and Urban Affairs Committee, and Mike Crapo, R-Idaho, ranking member of the Senate Committee on Finance, and Sen. John Thune, R-S.D., were among the signees, as was every GOP member of the banking and finance committees.
The Treasury Department proposal would require the IRS to report inflows and outflows from accounts with at least $600 of deposits or withdrawals. Democratic leaders in Congress have agreed that the threshold should be increased to $10,000 and are looking at additional exceptions, such as excluding payroll deposits or mortgage payments, to narrow the scope of accounts that would be reported to the IRS.
The measure, which could be added to the Democrats' $3.5 trillion spending bill, would help the IRS identify high-income earners who might be hiding income from taxation, supporters say.
The GOP senators said the IRS already is overwhelmed.
"Simply flooding the IRS with more data and burdening taxpayers, financial institutions, and already overwhelmed IRS service centers with more paperwork is of questionable value, especially when the IRS does not effectively use data already in its possession," the letter said.
The American Bankers Association, Independent Community Bankers of America, and Credit Union National Association supported the letter, Newsweek said.
Rob Nichols, president and CEO of the American Bankers Association, said the proposal would force banks to "provide private financial data on almost every taxpayer to the IRS, not just those suspected of cheating on their taxes."
"It's not clear the IRS could even process and protect all that information," Nichols said. "Perhaps most troubling of all, it risks driving people away from the banking system and all the economic benefits that come from having a bank account. We urge Congress to reject this bad idea."
Information from Bloomberg was used in this report.
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