COLORADO SPRINGS, Colo. (KRDO) -- Strong opposition coming from both political parties to the new tax information reporting proposal by the Department of Treasury, If approved, the proposal would impact many Americans with bank accounts.
The proposal will require providers of financial services to track and submit to the IRS information on the inflows and outflows of every account above a threshold of $600 during the year.
According to some in the financial industry, this proposal would create serious financial privacy concerns, increase tax preparation costs for individuals and small businesses, and create significant operational challenges for financial institutions.
“This is a very slippery slope. It does not matter which side you come down on politicly - this really is putting the banks into a role of investigation and potentially enforcement and turning over all that information to the IRS which just creates a big phishing expedition for them… not a big fan of that,” Brad Harvey said.
Harvey who runs his own private wealth management practice in Colorado Springs, and prior to that served as a wealth advisor for over 20 years with large financial firms says while the goal of the proposal is to uncover tax dodging by the wealthy, it’s not remotely targeted to that purpose or that population.
“The problem is with this, for the super wealthy look at the unintended consequences what if they decide okay fine I am going to bank outside of the US," Harvey said. "Then what about the other people who just decide okay I’m just not going to have a bank account?”
Privacy is another big concern. According to the Treasury Department, they only plan to use the data to increase the audits for those who make over $400,000 a year. But the question remains: Why does the IRS need account information if they aren’t going to use it?
“The banks that are going to have to carry out this rule are also going to have to expend some significant resources to capture this data,” Harvey said.
It is fair to note - congressional leaders are looking to “soften the edges” of the new proposal, by exempting *some* payment processors and providing support to institutions to aid processing. Though nothing has been set in stone.
Rep. Lauren Boebert joined 33 other members of the House of Representatives in cosponsoring the Protecting Financial Privacy Act to *prohibit* the IRS from accessing and monitoring Americans’ transactions above $600.