If community bankers weren’t busy enough continuing their heroic economic response to the pandemic, a recent proposal to impose new IRS reporting mandates on customer bank accounts has become a major advocacy priority.
The proposal would require financial institutions to report information on customer bank accounts to the IRS. This would be an enormous burden on the community banks required to furnish this information and a breach of their customers’ privacy.
Specifically, the proposed fiscal 2022 budget would require banks and other financial institutions to report to the IRS on the deposits and withdrawals of all business and personal accounts with a balance of more than $600.
ICBA has strongly objected to the proposal, which would be an unwarranted infringement on the privacy of bank customers and create complex new reporting burdens for community banks.
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ICBA has alerted policymakers with a fact sheet and hearing statement, a Minority Bank Advisory Council letter to congressional leaders, a joint letter with 44 state community banking associations, and thousands of grassroots messages from community banks.
Our advocacy messages highlight that new IRS bank account mining would:
Be intrusive and indiscriminate for bank customers.
Undermine the goal of bringing unbanked Americans into the banking system.
Increase taxpayer complexity and confusion.
Enlist community banks as agents of the IRS while imposing new reporting burdens.
Expose banks to penalties for inadvertent errors.
Channel more information into the IRS than it can process.
Instead of a fishing expedition that infringes on the privacy of bank customers and occupies resources that could otherwise be focused on serving local communities, ICBA is urging the IRS to close the tax gap with data it already has.
As always, ICBA urges community bankers to get involved and join us in this effort to oppose the proposal via our Be Heard grassroots action center. But to activate consumers, we’ve also unveiled a new website for community bank customers so they can get informed and weigh in.
At banklocally.org/privacy, community bank customers can send a customizable message to their members of Congress expressing concern with the proposal and urging opposition. ICBA also offers a template with sample email text as well as custom social media messages that community bankers can use to inform their customers of the proposal and how they can contact policymakers.
As community bankers, we want our customers to know the facts. Consumers should be aware of the potential negative effects of this proposal, and there’s nobody better than their trusted community banker to educate them and help ensure their voice is heard in Washington.
ICBA will continue speaking out against this proposal and the threat it poses to consumer privacy and community bank operations, but lawmakers are much more interested in what their constituents have to say.
Let’s work together to spread the word about the flaws in this misguided proposal—on Capitol Hill and in local communities nationwide.
Rebeca Romero Rainey is ICBA president and CEO.