New House Bill Pushes Back on Concerning IRS Bank Reporting Proposal

Dear Representative Ferguson:

On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to thank you and your colleagues for introducing the Prohibiting IRS Financial Surveillance Act and to offer NTU’s endorsement of this bill. It is critically important that Congress avoid enacting an IRS bank reporting regime that raises significant privacy concerns for tens of millions of American taxpayers and businesses.

NTU Foundation’s Joe Bishop-Henchman has previously written that a bank reporting threshold of either $600 per year in gross inflows and outflows or $10,000 per year in gross flows would ensnare most Americans in IRS monitoring of their financial activity. As Bishop-Henchman wrote:

“The median small business has inflow and outflow of $755 a day, so they’ll hit $10,000 in about two weeks. The median checking account balance in the U.S. is $3,400 at any one time, and based on the rule of thumb that your balance should be one to two months’ worth of expenses, that’s $20,000 of inflow and $20,000 of outflow minimum for most Americans.”^[1]

While the Biden administration claims the reporting requirement is intended to target only large corporations and wealthy taxpayers, there are several reasons to believe otherwise. Recent reporting indicates that the Biden administration estimates a $10,000 bank reporting threshold will allow Treasury to raise $200 billion to $250 billion over the next 10 years.^[2] This is $210 billion to $260 billion less than the administration estimates it can collect from a $600 bank reporting threshold.^[3] The implicit admission from the administration here is that, unless they believe billionaires and wealthy corporations cheat significantly on their taxes with bank accounts ranging in gross flows of $600 to $10,000 per year, a $600 reporting threshold would lead to the IRS collecting significant amounts of revenue from low- and middle-income taxpayers and small businesses. This should be unacceptable to lawmakers, banks, and the nation’s taxpayers, and indeed many affected parties have raised major privacy and due process concerns with the bank reporting proposal at any threshold.^[4]