Janet Yellen still supports a plan to force banks to provide the IRS with new customer data.
WASHINGTON – Treasury Secretary Janet L. Yellen said on Tuesday she still supports a controversial proposal that would require banks to turn over additional information about their clients’ accounts to the Internal Revenue Service, arguing the proposal would help to ensure the rich don’t dodge taxes.
The idea of ââbank reporting had been at the heart of the Biden administration’s plan to narrow the $ 7 trillion “tax gap” – the deficit in taxes owed but not collected – and to help pay for both. $ 200 billion worth of social policy and climate legislation that Democrats are trying to pass this year. After a fierce backlash from banks and Republicans, who ridiculed the idea as an invasion of privacy, it was removed from the bill House Democrats passed this month.
The Biden administration is hoping that a more modest version of the proposal could appear in the Senate version of the bill. Ms Yellen said she still supports the concept that banks share account data with total annual deposits or withdrawals over $ 10,000, with the exception of employees or people who receive federal benefits like social Security.
“I support him,” Yellen said at a Senate Banking Committee hearing. “I think it’s important for the IRS to have visibility into opaque revenue streams and it’s an important way to improve tax compliance.”
Republicans insisted the IRS could not be trusted with additional data due to recent leaks of taxpayer information and the agency’s history of targeting political groups.
“Certainly, my constituents cannot endorse this aspect of the Build Back Better plan which would give even more authority and a ten-fold increase in the budget to snoop more Americans, audit more Americans and invade our privacy,” said Sen. Bill Hagerty, Republican of Tennessee, said.
Ms Yellen said the plan was not an attempt to “spy” on taxpayers or collect detailed information about their banking activities.
âThe burden on financial institutions was minimal and no attempt was made to target people with actual incomes below $ 400,000,â Ms. Yellen said.
While the odds of the bank reporting requirement in final legislation appear slim, Democrats are counting on $ 80 billion investment to expand IRS enforcement capacity to generate $ 400 billion in revenue additional taxes over a decade. This estimate, which is more optimistic than the Congressional Budget Office projections, allows the Biden administration to say that the new spending will not increase the national debt.
âThese are very important resources that are needed to ensure that the wealthiest individuals, and businesses in particular, comply with tax laws and pay their fair share, which is due,â Ms. Yellen said.