Dear Editor,
Today, there is a dangerous proposal in Washington that would require financial institutions to report to the IRS how much money has gone into and out of accounts holding more than $600. In addition, transferring money from one account to another by an individual could also be subject to reporting. Employees of both banks and credit unions should not be agents on behalf of the IRS in reporting this information.
If there is interest earned on a savings account, it is already reported due to current requirements, which is understandable. However, this proposal would require the local bank or credit union to track their customers‘ money and then to send that activity to the IRS and for the IRS to then decide if any of the bank or credit union customers are avoiding paying taxes.
It is not clear that requiring banks and credit unions to report on every single customer’s financial activity with gross inflows and outflows above $600, creating a mountain of new data, will lead to better tax compliance. Further, this proposal creates massive data security and customer privacy concerns. Furthermore, banks and credit unions already report a tremendous amount of data to the IRS, which the IRS has publicly stated it does not have the capacity to utilize. The amount of new information submitted to the IRS related to this proposal would be unmanageable and of questionable relevance to the calculation of taxable income.
Instead of infringing on the privacy of customers and occupying resources that could otherwise be focused on serving local communities, banks and credit unions urge the IRS to close any tax compliance gap with data it already has.
Sincerely,
Robert Taylor
Chief Executive Officer
Louisiana Bankers Association
