AFSA, Joint Trades Comment on Tax Provisions in Reconciliation Package
Today, AFSA and about thirty other financial services trades sent a letter to the House Speaker Pelosi and Minority Leader McCarthy in advance of their consideration of a tax provision in the reconciliation package. The provision, which AFSA and others strongly oppose, would establish a broad new tax information reporting requirement, negatively impacting both individuals and small businesses alike.
The tax proposal would require financial institutions and providers of financial services to track and submit to the Internal Revenue Service (IRS) information on the inflows and outflows of any account above a $600 minimum threshold. The goal of the proposal is to prevent tax evasion from the wealthy; however, this would actually create significant privacy concerns and tremendous liability for all account holders. The provision requires collection of financial information for nearly all Americans without explanation of how the IRS will store, protect, and use the personal account data.
The financial trades state that “The fact that raw data exists somewhere in a system does not mean it is easily compiled or produced. For taxpayers, both individuals and small businesses, the complexity of collecting this information will be invisible, but when tax season arrives, they will face an IRS with vast new data sets to mine, and new questions about account activity that may have no obvious connection to tax liability.” The letter further maintains that “taxpayer confusion and tax preparation costs will increase.”
The Rules Committee meets later today to consider the reconciliation package that contains the tax provision, and AFSA will continue to monitor any progress.
September 17th, 2021 by Dan Bucherer