Congress—Don’t give the IRS access to consumers’ bank accounts
By Mark Brase, President, Points West Community Bank
Credit unions and banks in Colorado are jointly opposed to an item being considered as part of the proposed $3.5 trillion reconciliation bill. The bill may include a provision requiring credit unions and banks to report to the IRS the account transactions (deposits or withdrawals) of accounts that hold more than $600.
What does this mean for you, the consumer? An invasion of your privacy and potential additional taxes. This proposed fishing expedition is bad for consumers.
The proposal states that if your account balance is above $600 at any given time, your financial institution will be required to track your transactions and report them to the IRS using an enhanced annual I.R.S. Form 1099-INT. Whereas the Form 1099-INT reports taxable activity, this new reporting requirement would not reflect any taxable activity. Instead, what the Administration hopes the IRS would be able to do is to use this enormous data grab to identify unreported taxable income. But it’s not clear how the IRS will use this data to accomplish its goal. Further, the federal government’s history of keeping this type of data secure is dubious at best.
It fundamentally changes the nature of the information that your financial institution is required to report on you and forces your financial institution to provide the government with information that does not reflect the taxable activity. The Treasury Department and IRS have both stated this is a method for them to raise revenue.
The privacy of our Points West Community Bank customers is just one of a multitude of reasons we are opposed to this measure. For financial institutions to comply with this requirement, there would also be significant regulatory burdens added to their operations. This would likely require them to invest in updating software, add and train staff on new procedures, manage complaints regarding the requirement to turn this information over to the government, and take other actions. All of this will come at a cost to members and customers.
Additionally, there is the potential for security breaches of consumers’ personal data. The IRS is one of several government systems that has recently experienced a data breach. Financial institutions are highly concerned about the government’s ability to keep your data secure.
We ask you to contact your member of Congress in Washington and tell them to oppose this measure. Congress should not approve the IRS to have access to your personal financial transactions in a blatant attempt tax you unnecessarily. This is an epic overreach. Please make your voice heard. Your privacy and money are at stake.