(TargetLiberty.org) – When President Joe Biden first announced the American Families Plan, few realized the kind of controversy it would ignite. The agenda asks financial institutions to report bank account inflows and outflows in excess of $600 to the IRS. Biden’s administration claims that shift would empower the government to better track and penalize high-income tax dodgers. Yet, some leaders worry it will become a dragnet and privacy nightmare instead.
Facts From the US Treasury Department
A May 2021 US Treasury report sheds light on the AFP’s proposed tax compliance agenda. It claims the Biden administration wants to close the nearly $600-billion tax gap between what Americans owe and what most actually pay. The same document warns that number might rise to $7 trillion within a decade if leaders fail to take action to address the missing funds.
What has most experts so concerned isn’t simply wanting to root out tax dodgers. Instead, they’re worried about how the administration seeks to achieve its goal.
The treasury report specifically asks financial institutions to begin reporting bank account inflows and outflows to the IRS, who will allegedly use the data to “better target enforcement activities” focused on wealthy tax cheats. Banks already report a plethora of other data to the agency year-to-year.
The report itself fails to mention any kind of financial reporting threshold. However, a recent tweet from Rep. Tim Walberg (R-MI) reveals that it currently sits at $600.
This push by the Biden Administration to have the IRS collect data on personal bank transactions over $600 is the epitome of government overreach. It is nothing short of a serious invasion of privacy.https://t.co/mTCEAMtEZh
— Rep Tim Walberg (@RepWalberg) October 1, 2021
Congressional Democrats recently proposed increasing that amount to $10,000. They feel this higher threshold will protect low-to-moderate income Americans from unnecessary scrutiny.
Confusion Around Concerns
Experts have other concerns aside from the problem of Biden’s tax compliance agenda unfairly targeting lower-income Americans. Yet, the amount of confusion and misinformation surrounding the issue makes it downright difficult to get to the truth.
For example, the Washington Examiner reported that Democrats intended to track all transactions over $600 on September 30. But an article posted by USA Today just one day earlier debunks the idea, saying it exaggerates reality.
USA Today claims the AFP won’t track individual transactions — just overall inflows and outflows valuing $600 instead. It also points out the fact that the proposal has yet to pass Congress, and thus, doesn’t necessarily pose an immediate threat.
Does it then follow that Biden’s tax compliance proposal is safe and free from the potential of privacy violations? Some financial experts say the answer is no. For instance, John Kinsella, tax policy vice president at the American Bankers Association, believes the information will be “irrelevant to calculating taxable income” while posing a data security risk to taxpayers.
In an era when breaches are more common than ever, and the IRS already has a shaky reputation for mishandling data, additional reporting could effectively usher in opportunities for data theft.
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