Tax law and federal budgets are inherently boring things, so it comes as no surprise that language is often slipped into those bills that would otherwise cause outrage if proposed individually. Like giving the IRS access to your personal and business bank account.
The Biden Administration’s 2022 budget proposal — which claims to advance “equity across government” — included a provision that generally slipped under the radar, but would impose onerous new reporting requirements on community banks and raises privacy questions.
The Independent Community Bankers Association reports that the proposal would require financial institutions to report information on customer bank accounts to the IRS.
Currently, banks are only required to report deposits of $10,000 or more, however, the proposal would require banks and other financial institutions to report to the IRS on the deposits and withdrawals of all business and personal accounts with a balance of more than $600.
The Kansas Bankers Association objected strongly to the proposed requirement and said flatly that they stand in opposition.
“The new reporting requirements would raise questions about customers’ right to privacy, create unnecessary and expensive burdens for banks and raise the cost of tax preparation for small businesses,” President & CEO Doug Wareham said in a statement. “While all banks would be affected, small community banks with limited internal resources will be especially burdened by this new requirement. The new requirements will require a massive and expensive compliance effort to track and report inflows and outflows on all bank products.”
ICBA — and 44 other community bank associations — have more or less gone to war over this issue sending out a fact sheet and hearing statement, a Minority Bank Advisory Council letter to congressional leaders, a joint letter with 44 state community banking associations, and thousands of grassroots messages from community banks.