By Colin Barrett
President and CEO, Tennessee Bankers Association
A proposal in Washington to require banks to report customer account transactions to the Internal Revenue Service has become a major advocacy priority for banks, and it should be top priority for all Tennesseans to oppose as well.
In May, a proposal surfaced that would impose new IRS reporting mandates on customer bank accounts. If passed, all banks and other financial institutions would be required to report virtually every account deposit and withdrawal to the IRS, regardless of customers’ consent. This requirement would apply to every personal and business bank account with inflows or outflows of $600 annually or $50 worth of activity each month.
While the goal of the proposal is to close the “tax gap” by helping the IRS detect unreported income, the comprehensive, untargeted nature of the proposal would create an unacceptable invasion of privacy for Tennesseans.
Mandating new, broad account reporting and forcing banks to act as IRS agents would only serve to push more people away from a banking relationship and overload the IRS with unnecessary personal information. So much information that it could not possibly process it in a meaningful way or keep it safe from a data hack.
In a recent Senate hearing, Tennessee Senator Bill Hagerty voiced serious concerns and questioned the ability of the IRS to keep the information confidential. He’s right. According to the U.S. Treasury Department, the IRS experiences 1.4 billion (with a “B”) cyberattacks annually. That’s not a great confidence-builder when it comes to protecting the financial information for hundreds of thousands of Tennesseans.
In another hearing, Tennessee Congressman David Kustoff, who views the proposal as a massive invasion of privacy, raised those concerns in his exchange with Treasury Secretary Janet Yellen during a House hearing.
People and businesses have trusted our state’s banks for generations. Now some in Washington seek to destroy that trust. We will do everything in our power to prevent this proposal from becoming reality, but we can’t do it alone.
If you value your financial privacy, we urge you to spread the word and ask your representatives in Washington to push back against this proposal.