Democrats are proposing requiring banks to disclose to the IRS those accounts that have total annual inflows or withdrawals of at least $10,000, in an attempt to catch tax evasion by the wealthy and boost federal revenues.
The plan would help fund President Joe Biden’s multitrillion-dollar economic agenda, potentially raising $700 billion and reducing the need for tax increases to offset the cost of new social spending.
Lawmakers are rejiggering the proposal after a wave of criticism by Republicans and bank lobbyists. The $10,000 threshold replaces the $600 proposed by the Biden administration. It would exclude wage deposits and payments under federal programs — so that only accounts with “opaque” income streams would be reported to the government, according to a fact sheet from the Treasury Department released Tuesday.
Democrats say there is precedent for requiring banks to report account information to the federal government. The Treasury is proposing two new data points — the sum of all the deposits and the total value of withdrawals — to add to a tax form where banks already report interest amounts and other account data to the IRS.