The Biden administration has revised a controversial plan that would require banks and other financial services institutions to report account data to the Internal Revenue Service (IRS) in an effort to crack down on tax cheats.
The original proposal—which sparked ire among banking trade groups, consumers, and even debt collectors—would have required financial firms to report aggregate data for all accounts with at least $600 flowing in and out annually. Under the revised plan, firms would still be required to report account data, but the threshold has been increased to $10,000, meaning accounts with less than that flowing in and out each year would not be subject to the rules.
The proposal would not, as some critics have said, allow the IRS to track individual transactions, and banks would not be required to report individual transactions to the IRS. Rather, according to a fact sheet supplied Tuesday by the U.S. Treasury, “banks would add two additional data points to the information that is already supplied to tax the IRS: how much money went into the account over the course of the year, and how much came out.”