Democrats scale back IRS bank reporting plans |
Senior Democrats in Congress have agreed to raise their proposed tax reporting threshold for bank account inflows and outflows to $10,000 a year, with exemptions for wage income, from an earlier proposal of $600 that drew criticism for being too intrusive. U.S. Senate Finance Committee Chairman Ron Wyden (D-OR) on Tuesday said the new $10,000 IRS reporting threshold, to be included in Democrats' sweeping "reconciliation" social spending and tax hike legislation, was chosen after consultations with the U.S. Treasury because it is a level frequently used in other bank reporting requirements. These include requirements for banks to report daily aggregate cash transactions of $10,000 or more under anti-money laundering rules. “We’re adding language to ensure enforcement efforts are focused on the very wealthy,” Mr. Wyden said Tuesday. He added that the $10,000 figure was chosen because it is used in other instances. It is the threshold for when cash transactions must be reported to the government. Raising the reporting level is insufficient, banking industry executives said. Moreover, exempting certain payments would make it more complicated for financial institutions to determine which accounts should be subject to reporting, industry representatives added. “Banks aren’t the answer here,” said Greg Carmichael, chief executive of Fifth Third Bancorp. “We would hate to see [the requirement] materialize and be asked to police that space.”