Democrats pitch scaled-down U.S. bank tax reporting requirement

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WASHINGTON, Oct 19 (Reuters) – U.S. Senate Democrats on Tuesday unveiled a scaled-down model of a proposal to crack down on rich tax cheats after intense bank lobbying, though the business nonetheless referred to as the plan onerous and problematic.

The provision, a part of a broader authorities spending bundle, would require banks to report back to the Internal Revenue Service any accounts that see exercise in extra of $10,000 a 12 months, excluding wages. That is a rise from the unique proposal, which might have flagged accounts with over $600 in cash getting in or out.

Banks will not be presently required to report such accounts to the IRS.

Democrats mentioned the availability may give tax collectors invaluable data for figuring out people or firms that underreport their taxes.

“For years, giant corporations and the wealthy have worked to rig the tax code,” mentioned Senator Elizabeth Warren, a Democrat and outstanding bank critic. “This means the IRS can spot when a wealthy tax cheat has millions of dollars flowing into an account but isn’t reporting that money on their tax return.”

The Biden administration threw its assist behind the revamped proposal. U.S. Treasury Secretary Janet Yellen mentioned in a statementit “reflects the Administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe.”

Proponents of the measure had pointed phrases for critics, together with the banking business, which they accused of inaccurately suggesting the coverage would require banks to inform the IRS about particular bank transactions. Senator Ron Wyden, chairman of the Senate Finance Committee, mentioned opponents had engaged in “egregious lies and misrepresentations.”

“The IRS would not know what any taxpayer is purchasing, and that is something I insisted on,” he mentioned.

Nonetheless, banks, which intensely lobbied alongside conservative teams towards the unique provision, continued to criticize the revamped plan. Rob Nichols, president and chief government of the American Bankers Association, referred to as on lawmakers to oppose the proposal.

“If enacted, this new proposal would still raise the same privacy concerns, increase tax preparation costs for individuals and small businesses, and create significant operational challenges, particularly for community banks,” he mentioned in a press release. learn extra

Among business considerations concerning the proposal is that the $10,000 threshold may nonetheless sweep in too many common Americans for potential audits.

“Raising the brink to $10,000 sounds prefer it’s an enormous improve, however it’s not. It’s basically flawed at any threshold,” said Ryan Donovan, a lobbyist for Credit Union National Association.

Reporting by David Lawder and Pete Schroeder; Editing by Jonathan Oatis and Peter Cooney

U.S. President Joe Biden speaks briefly with reporters after participating in a ceremony for state and national Teachers of the Year at the White House in Washington, U.S. October 18, 2021.  REUTERS/Jonathan Ernst/Files