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Upton, House Republicans Oppose Proposed IRS Financial Surveillance Policy

Washington, October 6, 2021 | Billy Fuerst (202-225-3761)
Tags: Taxes

WASHINGTON, D.C. - Last month, U.S. Rep. Fred Upton, R-St. Joseph, joined many of his Republican colleagues and signed on to a letter to Treasury Secretary Janet Yellen, Internal Revenue Service (IRS) Commissioner Charles Rettig, U.S. House Speaker Nancy Pelosi, and Chairman of the House Ways and Means Committee Richard Neal voicing his strong opposition to a proposed IRS policy that would increase bureaucratic surveillance of personal financial information, and require financial institutions like banks and credit unions as well as their customers to report to the IRS any transaction over only $600, such as mortgage payments, car payments, school loans, credit card bills, and utility bills. This new proposal would be implemented as part of the Democrats’ massive $3.5 trillion budget reconciliation package that so far has failed to secure the necessary votes to pass either the U.S. House of Representatives or the U.S. Senate.

“Requiring banks and their customers to report to the IRS any transaction that exceeds $600 - whether that be a water bill or a mortgage payment - is a step too far,” said Rep. Upton. “We should be cutting red tape; not creating headaches for small financial institutions and the many folks who use their services. This proposal, which violates folks’ privacy, must not - and cannot - become law.”

“The recent spending proposal to include new tax information reporting requirements for financial institutions would not only impose significant compliance costs on our banks, credit unions, and related financial institutions that have served as the backbone of this economy these past 18 months, but also infringe on the privacy of millions of Americans,” the lawmakers wrote.

The lawmakers continued, “Not only would such an overly comprehensive IRS database require significant resources to build, maintain, and protect, but it would make the personal, financial data of millions of Americans vulnerable to attack. Considering the IRS experiences 1.4 billion cyberattacks annually and has experienced multiple data breaches, we should not give this agency additional sensitive data to manage.”

Upton has long supported lowering taxes on hardworking Michiganders and strongly opposes any effort to grow the IRS bureaucracy at the expense of taxpayers. In 2017, he voted for and President Trump signed into law the Tax Cuts and Jobs Act of 2017, which cut taxes for middle-class families and small business as well as spurred economic growth in Southwest Michigan and nationwide. 

You can read the full letter HERE or below:

Dear Speaker Pelosi, Chairman Neal, Secretary Yellen, and Commissioner Rettig:

We are concerned about a recent IRS data collection proposal to increase tax information reporting requirements on financial institutions, which we do not believe are necessary or helpful toward closing the “tax gap.”

The recent spending proposal to include new tax information reporting requirements for financial institutions would not only impose significant compliance costs on our banks, credit unions, and related financial institutions that have served as the backbone of this economy these past 18 months, but also infringe on the privacy of millions of Americans.

Specifically, such a proposal would require financial institutions and other financial services providers report information about the outflows and inflows on accounts over $600 to the IRS every year. However, financial institutions currently report a tremendous amount of data to the IRS, and no evidence has shown that the proposed requirements would substantially aid the IRS’s efforts to close the tax gap beyond the information already at the IRS’s disposal.

Not only would such an overly comprehensive IRS database require significant resources to build, maintain, and protect, but it would make the personal, financial data of millions of Americans vulnerable to attack. Considering the IRS experiences 1.4 billion cyberattacks annually and has experienced multiple data breaches, we should not give this agency additional sensitive data to manage.

Additionally, privacy is one of the primary reasons individuals choose not to open bank accounts. This overreaching proposal, if adopted, would further exacerbate banked/unbanked/underbanked divides.

We ask you to address our concerns as we work to craft a regulatory environment focused on protecting Americans and our financial system, not one focused on raising revenue at the expense of our taxpayers and financial institutions.

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