Speaker of the House Nancy Pelosi (D-Calif.) has doubled down on a provision in the Democrats’ multi-trillion-dollar reconciliation bill that would allow the Internal Revenue Service (IRS) to see information on all Americans’ bank transactions totaling $600 or more. Republicans and banks have raised the alarm about the provision, reporting that their constituents and clients are deeply concerned about the proposal.
Since the introduction of their reconciliation bill, Democrats have insisted that the bill will not add to the debt or the deficit, claiming that all new spending in the bill will be paid for.
Along with significantly increasing marginal tax rates to pay for the bill, Democrats proposed and wrote into the bill a section to allow the IRS to gather Americans’ private information from banks, including information on all transactions totaling more than $600.
Banking industry officials and other financial services firms are bracing for a long fight over a bill that will require banks to share consumer account information with the Internal Revenue Service to boost federal tax revenue.
This notion originally gained traction this spring within the American Families Plan by the Biden administration. But bankers and even some consumer groups have slammed it as a compliance concern and a privacy issue. Financial institutions already provide the IRS with large quantities of data.
As part of the 3.5 trillion dollar budget reconciliation package proposed by the Biden administration, legislators are considering this invasive proposal as an income source to fund the massive budget.
The Biden administration argued that bank surveillance would prevent tax evasion, but many are obviously concerned that it’s a breach of the Fourth Amendment (which protects people from unreasonable searches and seizures by the government) and would also favor those who are embracing the move towards decentralized finance and cryptocurrencies, as well as those that use off-shore accounts.
The proposals would force banks to report every deposit and withdrawal related to a bank account and would also include centralized companies such as PayPal, Venmo, (owned by PayPal), CashApp, and cryptocurrency exchanges.
A former Treasury Department official, Edwards — whose decision to leak a trove of highly confidential government documents to BuzzFeed News prompted a massive investigation that exposed how dirty money moves through the global banking system and helped spur legislative action in the US and beyond — reported to Federal Prison Camp, Alderson, on Friday morning to begin her six-month sentence. The minimum-security prison is where Martha Stewart and Billie Holiday both served time.
The information she provided to BuzzFeed News formed the basis of the FinCEN Files, which was a finalist for the Pulitzer Prize, journalism’s highest honor.
But many across the US are not familiar with Edwards. Labeling her “the forgotten whistleblower,” the Washington Post described her in July as “one of the most important whistleblowers of our era, and yet hardly anyone remembers her name.”
Despite losing her freedom and most, if not all, of her family’s finances waging a legal fight, Edwards maintained she had no regrets, believing her actions will help thwart future criminals and terrorists. “I’m absolutely proud of what I did,” she said, “and I know American lives have been saved.”
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.
In April, MasterCard announced a policy change set to take effect on October 15 requiring “the banks that connect merchants to our network…to certify that the seller of adult content has effective controls in place to monitor, block and, where necessary, take down all illegal content.”
The idea of payment processors and banks rejecting tech platforms, causing them to struggle to survive, is nothing new.
Alternative social network Gab has struggled to be able to maintain a bank account and has faced constant deplatforming by payment processors. It has also been blacklisted from the Visa payment processor.
While such groups as National Center on Sexual Exploitation (NCOSE) have praised the payment processor crackdown on platforms such as OnlyFans, it’s clear that there’s an obvious exploit in how platforms work – that payment processors, with enough pressure, can shut down entire platforms overnight. This is especially a problem when there’s a Visa and MasterCard duopoly in the payment processor market and simply two companies ultimately deciding what’s allowed to exist online.
PayPal took its first step towards suppressing dissent when it banned the account of Julian Assange in 2011. In recent years it has targeted the right, blacklisting the free speech video platform BitChute, Republican congressional candidate and activist Laura Loomer, and the conservative street artist Sabo.
The Electronic Frontier Foundation (EFF), a liberal digital rights organization, has opposed the rise of financial censorship for over a decade. In 2018, the organization warned that banks, payment processors, and credit card companies were becoming “de facto internet censors.”