WASHINGTON (Reuters) – U.S. banks will not be required to report additional information about certain accounts to the Internal Revenue Service after Democrats removed the proposal from a sweeping government spending package.
The exclusion of the provision, originally sought by some Democratic lawmakers as a way to identify people underreporting income on their taxes, marks a major victory for banks and credit unions that had vigorously opposed the provision.
U.S. President Joe Biden unveiled here the framework for a $1.75 trillion economic and climate change plan on Thursday, his latest attempt to unify Democrats in Congress behind a comprehensive bill pursuing many of his top policy priorities.
Earlier versions of the package, which reached as high as $3 trillion in new investments, also included language requiring banks to report to the IRS any bank accounts that had $600 in money in or out every year. That proposal was not included in the framework outlined by the White House on Thursday.
Proponents, including Treasury Secretary Janet Yellen, argued that the information would make it easier for tax collectors to identify accounts that experienced significantly higher activity than reported on taxes, and also raise large amounts of revenue to help pay for the new spending proposals.
The banking industry, calling the provision onerous and intrusive, launched an all-out lobbying battle against it. Democrats attempted to temper the provision by raising the reporting threshold to $10,000, but intense industry opposition, alongside concerns from moderate Democrats, helped push it out of the revamped package.
“The last thing Americans want right now is the government snooping on their accounts,” said Jim Nussle, head of the Credit Union National Association. “Safeguarding consumer privacy and data security is a key part of promoting financial well-being for all, and it’s encouraging that Congress recognizes this credit union priority.”
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