A group of 21 Democratic U.S. representatives sent a letter to House leadership on Wednesday calling for a proposed bank reporting rule to be removed from the $2 trillion dollar budget reconciliation bill.
The proposal Democrats are seeking to have removed would require the gross annual inflows and outflows of U.S. financial accounts be submitted to the IRS annually, if they exceed $10,000. This rule would apply to accounts like checking accounts, saving accounts, loans and investments.
“While the intent of this proposal is to ensure all taxpayers meet their obligations — a goal we strongly share — the data that would be turned over to the IRS is overly broad and raises significant privacy concerns,” the lawmakers wrote in their letter.
The members of Congress took issue with the lack of information provided on how the IRS planned to protect this financial data, writing the proposal would “erode trust in financial services providers.”
The group acknowledged that while some changes have been proposed in response to concerns raised by constituents, the measure would still largely affect people who are not the “wealthy tax evaders” it is meant to target.
“Given the privacy concerns this raises in addition to the significant burden that would be imposed on a broad range of businesses and financial institutions, we respectfully request that this proposal not be included in the Build Back Better package,” they added.
The concerns raised in the letter largely mirror privacy concerns raised by Republicans and bank industry representatives, who vehemently oppose the measure.
The National Republican Congressional Committee released an ad campaign this week targeting vulnerable House Democrats over the IRS reporting proposal. The 19-second Halloween-themed ad accuses Democrats of “hiring an army of IRS agents to spy on your bank account.”
In a statement Wednesday, Rep. Cindy Axne (D-Iowa), one of the lawmakers who signed the letter, said that this proposal “went too far.”
“While I certainly think we need to be looking at ways to crack down on wealthy tax dodgers, I oppose implementing something that could up middle-class Iowa families and create massive amounts of red tape for our small community banks and lenders,” said Axne, who sits on the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets.
Other Democratic lawmakers who signed the letter include Reps. Ami Bera (Calif.), Josh Gottheimer (N.J.) and Stephanie Murphy (Fla.).
It was reported on Wednesday that negotiations on the reconciliation bill are in the home stretch as President Biden intensifies his efforts to reach an agreement with centrist Democratic Sens. Joe Manchin (W.Va) and Kyrsten Sinema (Ariz.). Senate Majority Leader Charles Schumer (D-N.Y.) said on Wednesday that “an agreement is within arm’s length.”
The bank reporting measure was among a number of proposals to pay for the reconciliation bill.
Democrats are also considering a wealth tax on billionaires who have earned $100 million or more for the past three years. Manchin on Wednesday said he did not like the proposed tax because of the “connotation that we’re targeting different people.”