Tens of millions of Americans could see their bank account information swept up and reported to the Internal Revenue Service under a deeply controversial proposal from Congressional Democrats, according to a new analysis.
The plan requires banks and other financial institutions to disclose accounts with $10,000 of annual deposits or outflows to the IRS, a move intended to help the agency crack down on wealthy tax cheats. Recipients of federal benefits like unemployment and Social Security would be exempt from the policy under the latest iteration of the proposal, which would also exclude any income received through a paycheck in which federal taxes are automatically deducted.
The Joint Committee on Taxation estimated that some 87 million Americans who earn less than $400,000 in adjusted gross income would see their account information reported to the IRS. That represents a little more than half — about 59% — of the 148 million taxpayers in the U.S. earning less than $400,000.
The White House has repeatedly defended the plan in the face of bank criticism, writing in a memo to congressional Democrats that requiring banks and financial institutions to provide a “little bit of high-level information” to the IRS on account flows gives the agency more information about wealthy Americans’ earnings from investments and business activity.