Valley banks have questions about Biden’s proposal of more bank reporting to the IRS
AUGUSTA COUNTY, Va. (WHSV) - The Biden administration is proposing to require financial institutions to report any deposit or withdrawal of more than $600 to the IRS.
It’s part of the Reconciliation Plan that’s being debated in Congress.
Right now, banks are required to submit currency transaction reports to the IRS if someone deposits or withdraws more than $10,000 in cash.
“We’re talking about going down to 600 dollars, which will require a whole lot more reporting and affect a whole lot more accounts and a whole lot more people,” President and CEO of F&M Bank Mark Hanna said.
He notes that they would go from processing several hundred reports each year to having to report almost every account.
“The thinking is if the government has more information to see your inflows and outflows into your checking account, your loan accounts, your bank savings accounts, that it will make it tougher to to evade and misrepresent your income tax liability,” Hanna said. “The administration is hopeful that instead of raising taxes for everybody, the collection of existing taxes that are not being paid would go up significantly, which may reduce the collection of or the need to raise taxes.”
But this proposal has raised some privacy concerns.
“How private, how secure is it, and do people want the government combing through their finances at that level?” Hanna said.
And there are still a lot of questions about how it all of this would actually work.
“Is it granular on a per-item transaction threshold or is it an aggregate? It’s hard to tell at this point. It’s all very new, and the information is kind of slowly leaking out, and I don’t even know if there is a concerted plan at this point,” Hanna said.
He adds that he’s also concerned about the additional work it would put on the banks.
“I’ve seen pundits that have said that it could take as much as 15 minutes per account for a bank to process the required information on the behalf of the IRS, so as you start talking about thousands of accounts, the amount of additional resources that would need to go toward this,” Hanna said.
Hanna adds they would also have to potentially buy new technology that would allow them to report, record and save the data.
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