The law, part of the $3.5 trillion reconciliation package on Capitol Hill, also presents liability concerns and will impact small businesses and consumers more than the large companies it is written for.
ACA International has joined more than 40 industry trade groups representing financial and business interests in a letter that urges Speaker of the House Nancy Pelosi, D-Calif., Minority Leader Kevin McCarthy, R-Calif., and members of the U.S. House of Representatives not to move forward with a proposal under consideration as a part of the reconciliation package that would establish an expansive new tax information reporting requirement with significant implications for consumers and small businesses with bank accounts.
“This proposal, as described by the Department of Treasury, would require financial institutions and other providers of financial services to track and submit to the IRS information on the inflows and outflows of every account above a de minimis threshold of $600 during the year, including breakdowns for cash,” the letter states. “While the stated goal of this vast data collection is to uncover tax dodging by the wealthy, this proposal is not remotely targeted to that purpose or that population. In addition to the significant privacy concerns, it would create tremendous liability for all affected parties by requiring the collection of financial information for nearly every American without proper explanation of how the IRS will store, protect, and use this enormous trove of personal financial information. We believe that this program is costly for all parties, not fit for purpose, and loaded with potential for unintended and serious negative consequences.”
The House returned from a six-week recess Monday.
The House and Senate have passed a resolution detailing the budget, including instructions for committees to allocate the $3.5 trillion in spending and add policy details, NPR reports.
“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. Taxpayer confusion and tax preparation costs will increase,” the letter states, adding the proposal would undermine efforts to reach vulnerable populations and unbanked households.
Industry trade groups signing on to the letter include the Consumer Bankers Association. American Bankers Association, SIFMA, Independent Community Bankers of America, Air Conditioning Contractors of America, National Association for the Self-Employed, Global Cold Chain Alliance, Specialty Equipment Market Association, ACA International, Independent Insurance Agents & Brokers of America, Independent Electrical Contractors, AICC, The Independent, Packaging Association, National Stone, Sand & Gravel Association, Credit Union National Association, Electronic Transactions Association, Southwest Cable, Communications Association, National Independent Automobile Dealers Association, Decorative Hardwoods Association, Energy Marketers of America, Brick Industry Association, Pet Industry Distributors Association, National, Association of Professional Insurance Agents, American Financial Services Association, Community Development Bankers Association, Commercial Food Equipment Service Association, Innovative Lending Platform Association, National Bankers Association, National Association of Federally-Insured Credit Unions, American Land Title Association, Auto Care Association, International Franchise Association, Promotional Products Association International, Mortgage Bankers Association, America's SBDC, Mid-Size Bank Coalition of America, Manufactured Housing Institute, National RV Dealers Association and the National Federation of Independent Business.