Republicans are pushing back hard on a proposal that would authorize the Internal Revenue Service to monitor Americans’ bank accounts by requiring financial institutions to report transactions of $600 or more, calling it “unwarranted snooping.”
The measure, which is included in Democrats’ massive $3.5 trillion reconciliation bill, is only aimed at high-income earners, according to Treasury Secretary Janet Yellen, but several Republicans aren’t buying that explanation given the low dollar amount to be monitored.
In an interview with Fox Business, Sen. Cynthia Lummis (R-Wyoming) said that the provision seeks to normalize government behavior that amounts to a significant constitutional encroachment on personal privacy that extends into the private sector.
“No amount of explaining will change the fact that this $600 reporting threshold is completely unacceptable, a massive government overreach, and gives the IRS data they can’t manage properly,” Lummis said, according to National Review.
“Secretary Yellen is essentially implying the American people are regularly committing tax fraud,” she noted further. “Throwing out ‘innocent until proven guilty,’ this rule would facilitate unwarranted snooping by the IRS.”
Yellen responded to Republican criticism in an interview with CBS that banks would only be required to report full-year deposit and transaction information from individual accounts and will not be required to report them in real-time.
However, Republicans argue that literally millions of bank accounts would fall under scrutiny for meeting the $600 minimum monitoring amount, and that the vast majority of said accounts are used for normal financial transactions such as paying bills.
Last week, Sen. Tommy Tuberville (R-Ala.) urged the chamber to pass his bill, the Protecting Financial Privacy Act, which would block the proposal, but in the Democrat-controlled Senate, it’s not likely to pass, much less be brought up for a vote.
Still, it represents another hurdle Democrats must navigate in order to pass a spending bill that is too large even for members of their party. As such, according to Bloomberg News, a higher transaction threshold of $10,000 is being considered.
Tuesday evening, CBS News aired a clip of anchor Norah O’Donnell pressing the Treasury chief about the provision.
“Does this mean that the government is trying to peek into our pocketbooks if you want to look at $600 transactions?” O’Donnell inquired.
“Absolutely not,” Yellen claimed. “I think this proposal has been seriously mischaracterized. The proposal involves no reporting of individual transactions of any individual.”
“Look, the big picture is that we have a tax gap that over the next decade is estimated at $7 trillion,” Yellen continued. “Namely, a shortfall in the amount that the IRS is collecting due to a failure of individuals to report the income that they have earned.”
In response, O’Donnell asked: “But that’s among billionaires. Is that among people who are transferring $600?”
“No, it tends to be among high-income individuals whose income is opaque and the IRS doesn’t receive information about it,” Yellen replied.
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