Pelosi defends IRS bank-reporting proposal, says specifics open to negotiation

Speaker Nancy Pelosi (D-Calif.) on Tuesday defended a proposal to increase the amount of information financial institutions report to the IRS about bank accounts, indicating the proposal would be a part of Democrats’ social-spending package.

Pelosi’s comments come as Republican lawmakers and banking groups have been increasing their criticism of the proposal in recent days. 

“Yes there are concerns that some people have, but if people are breaking the law and not paying their taxes, one way to track them is through the banking measure,” Pelosi said during a press conference.

The Biden administration has proposed requiring banks to report aggregate inflows and outflows of bank accounts in annual forms to the IRS, in instances where accounts have flows exceeding $600.

Democratic lawmakers have a tentative deal to raise that threshold to $10,000, and to exempt regular wage payments. Pelosi noted in her comments that the $600 threshold is not set in stone. 

“That’s a negotiation that will go on as to what the amount is,” she said.

The administration has said that the proposal would strengthen the IRS’s ability to crack down on wealthy tax cheats. The Treasury Department has estimated the measure would raise about $460 billion over 10 years that could be used to help offset the cost of new spending aimed at strengthening the social safety net.

Republicans and banks strongly oppose the proposal, arguing that it raises privacy concerns. Banks say their advocacy efforts against the proposal has resulted in an inundation of customer complaints about the idea, The New York Times reported.