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Security National Corporation

10/27/2021 | News release | Distributed by Public on 10/27/2021 13:10

New Bank Tax Reporting Rule: Separating Fact from Fiction

October 27, 2021

As your community bank, we want our customers to know the facts, especially when it relates to concerning developments around public policy that expose your financial privacy.

A new proposal in Washington would force banks to tell the IRS about any customer with more than $10,000 running through their bank account each year.

Our interpretation is that this reporting would apply to personal and business accounts, and would cover all types of accounts - deposits, loans and investments.

Congress is now quickly advancing this proposal through a budget reconciliation package, which needs only a simple majority to pass.

We believe this indiscriminate bank account reporting to the IRS would create an unacceptable invasion of privacy for our customers and cause unnecessary harm to small businesses.

While policymakers are attempting to quell the public backlash against the proposal - for example, lawmakers originally proposed reporting any transaction above $600 before it was promptly walked back - we do not believe any tweaks can salvage this misguided plan.

It is our belief that current revisions would only make the policy more difficult to implement, and do nothing to address the proposal's privacy, due process, and data security concerns.

As community bankers and consumers have repeatedly told policymakers, the proposal would:

  • Constitute a broad, unwarranted infringement on the privacy of all bank customers who aren't suspected of cheating on their taxes.
  • Be intrusive and indiscriminate, since the IRS already collects enough information to watch for tax evaders.
  • Undermine the goal of reducing the unbanked.
  • Increase taxpayer complexity and confusion.
  • Overwhelm the IRS with personal financial data, increasing risk of data breach.
  • Harm small businesses, who risk double-counting their income, and seeing an increase to their tax burden and audits.

If you wish to learn more about this issue, or you'd like to share your opinion with Congress, visit banklocally.org/privacy for additional resources.