Senate Democrats are set to unveil a proposal requiring that banks report some accounts to the Internal Revenue Service in their latest effort to come up with ways to finance President Joe Biden’s economic agenda, according to an aide familiar with the plan.
Senate Finance Committee Chairman Ron Wyden and Senator Elizabeth Warren, a member of the panel, will outline the proposal on a call with reporters Tuesday afternoon, according to the aide, who spoke on condition of anonymity as the plans aren’t yet public. The senators won’t release the legislative text but will publish information refuting what they say are myths that Republicans are spreading about their plan to crack down on tax evaders.
The proposal is the result of weeks of talks between Democrats about how to scale back an idea first floated by Treasury Department officials that would report accounts with at least $600 in deposits or withdrawals to the IRS.
Wyden and House Ways and Means Committee Chairman Richard Neal have both said they want to increase that threshold to $10,000 as well as narrow the proposal to only hit high earners. Democrats are looking at exempting certain payments, like payroll direct deposits and mortgage withdrawals, so that fewer accounts would have aggregate inflows and outflows of more than $10,000.
The Washington Post reported Tuesday’s planned announcement earlier.
Bloomberg Tax reported last week that the Biden administration plans to accept congressional changes aimed at saving its IRS data-collection proposal.
The initial bank reporting plan has been subject to weeks of criticism from banking groups and Republicans who have said the idea is government overreach and would give the IRS the ability to spy on ordinary taxpayers.
The administration has defended the idea, saying that more information from banks about accounts would help tax collectors catch cheaters. Supporters of the additional data reporting say it would allow the IRS to take in more revenue without having to raise tax rates.
That idea, of an alternative to higher taxes to pay for the Biden economic agenda, became less attractive as opposition mounted. House Democrats declined to include the measure in their version of the bill they passed in committee last month, instead opting to rely on tax increases on corporations and wealthy taxpayers.
