President Joe Biden and the Democrats in Congress are trying to force financial institutions to report their clients’ account balances to the Internal Revenue Service, thereby violating your privacy and further putting your financial data at risk.
This is part of a provision in the $ 3.5 trillion spending bill that should anger all Americans.
Under this requirement, the Internal Revenue Service – an already scandalized and historically politicized government agency – could once again be used as a weapon against political opponents while leaving middle-class Americans vulnerable to hacking or leaking more of their financial information.
Indeed, the Biden administration’s proposal would require financial institutions to report all transactions from accounts holding more than $ 600. It is designed as an effort to catch tax cheats and pay off the $ 3.5 trillion in spending.
After sparking outrage from consumers and financial institutions, House Democrats were sent back to the drawing board. Instead of realizing that the politics itself massively violates the privacy of Americans, House Ways and Means President Richard Neal, D-Mass., Still sees it as a financial issue and said Democrats could raise the threshold from $ 600 to $ 10,000.
The Internal Revenue Service as a political weapon
Regardless of what Democrats ultimately agree on, this provision raises concerns about the return of an extremely politicized Internal Revenue Service. The federal government’s tax collection agency has a habit of attacking groups and individuals who have particular political beliefs.
In 2013, the Treasury Department’s Inspector General of Tax Administration reported that the Internal Revenue Service of Lois Lerner, an Obama candidate, “was targeting specific groups seeking tax exempt status, delaying processing requests for tax exemptions from targeted groups; and requested unnecessary information from targeted groups.
The report explicitly mentions the Tea Party and other conservative groups as the targets of these abuses.
Additionally, two 2016 reports released by the Government Accountability Office stated that the Internal Revenue Service always selects individuals and small businesses for unfair audits “on the basis of an organization’s religious, educational, political or other views. “.
With these new provisions, political attacks would not be confined to groups and instead give the Internal Revenue Service a balance of cards to prey on individual Americans.
All Americans, not just conservatives, should be concerned about this level of public corruption and the Internal Revenue Service’s ability to prey on those it sees as the enemy of the regime.
A story of hacks and leaks
This proposal is also of great concern for the privacy of consumers. Americans will entrust their financial information even more to a government agency that has been the subject of politically motivated hacks and leaks.
From January 2014 to May 2015, online hackers targeted the Internal Revenue Service’s Get Transcript app, which allowed taxpayers to view, download, and order transcripts of their previous tax returns. The Internal Revenue Service statement on the violation admits that nearly 700,000 US taxpayer accounts are compromised.
This year alone, an anonymous leaker handed over a “vast cache of [Internal Revenue Service] information ”to the survey of the journalism site ProPublica. The documents covered more than 15 years of tax returns for thousands of America’s richest individuals.
While the story centers on the country’s wealthy, it once again highlights the reality that partisan actors within the Internal Revenue Service can and have acted in bad faith for political purposes.
Ineffective in increasing income
A closer look at Americans’ bank accounts will only increase the burden on individuals, small businesses and community banks who must devote limited resources to meeting these reporting requirements and do nothing to ensure that the wealthy pay “their fair share”.
“This will not be effective in reducing the tax gap,” said Matthew Dickerson, director of the Center for the Federal Budget at the Heritage Foundation. (The Daily Signal is The Heritage Foundation’s news and commentary platform.)
“The [Internal Revenue Service] would accumulate massive amounts of data on people’s financial records, but much of that information wouldn’t actually show the [Internal Revenue Service] what is the person’s taxable income.
At a Senate Banking, Housing and Urban Affairs Committee hearing on September 28, Senator Cynthia Lummis, R-Wyo., Asked Treasury Secretary Janet Yellen about the need for the proposal, saying the new regulations would treat the American people as “subjects of government.”
Yellen did not provide any details on how accurate tracking of account entries and exits will close the tax gap, other than that the reporting requirement will add more lines to an already tax reporting process. complicated.
While this provision was not initially included in the House Ways and Means Committee markup, House Democrats plan to push the proposal forward during this week’s Rules Committee markup.
Biden’s capture and tax system will not generate the administration’s projected revenue target. Americans should be aware of the potential abuses to which this provision lends itself, including adversarial administration and a risk to consumer privacy and financial data. The benefits of funding this juggernaut of a spending bill are small.
Making banks accountable for their customers to the Internal Revenue Service is just another way for the federal government to embolden its regulatory regime, and simply opens up more avenues for a Historically militarized Internal Revenue Service attacks American citizens.
Joel Griffith, Heritage Associate Research Fellow in Financial Regulation, said: “Smaller financial institutions will face high compliance costs. Ultimately, everyday families and businesses experience a loss of privacy, higher checking account fees, lower returns on savings, and fewer free services as a result. “
The Internal Revenue Service as well as the rest of the administrative state already have a strong grip on our day-to-day operations. They don’t need another channel to interfere in the personal lives of Americans.
This piece originally appeared in The Daily Signal