CLEVELAND — The Biden administration is trying to crack down on people ducking their taxes with a proposed policy to monitor the bank accounts of Americans.
The proposal would require financial institutions to report annual net deposits and withdrawals of Americans’ bank accounts, not including wages or certain federal benefits. The new proposed threshold for monitoring that information is $10,000 per year. Originally, that number was $600.
The proposal has brought a lot of criticism, including from the attorneys general of 20 states.
Ohio Attorney General Dave Yost was among those who signed a letter to President Joe Biden and U.S. Treasury Secretary Janet Yellen, opposing the policy.
“This makes the IRS more powerful than your local police department,” Yost said. “A cop, if they want to look at your bank account because they think you're dealing drugs or stealing money or whatever it is, committing a fraud, they've got to have the legal basis to get a subpoena. There's the legal process there.”
He added, “The bottom line is, I don't support this kind of invasion. I absolutely support law enforcement, and that includes enforcement on paying taxes. Pay your taxes. It's the right thing to do, it’s the legal thing to do. It's the moral thing to do. But giving the power to the government to go do this and just perpetually and automatically snoop with no reason whatsoever is a recipe for disaster.”
In a statement to News 5, U.S. Senator Sherrod Brown (D-Ohio) wrote, “We need more tools to crack down on wealthy tax cheats. That’s who this is about – getting more information from the CEOs and lobbying firms that cheat and try to hide their millions, and stick Ohioans with the bill. The IRS will not have the authority to look at everyday families’ bank accounts – that’s a partisan lie that’s been fact-checked and proven false. I want to keep cutting taxes for Ohio families, and we do that by making sure the ultra-rich and mega-corporations pay their fair share.”
Evan Kleymeyer, senior vice president of external relations for the Ohio Bankers League, said it also puts a burden on banks, which will have to run this information for all customers to find out if they’re above or below the specified threshold.
“It’s a pretty big invasion of privacy for most Americans. Private, personal, financial information,” Kleymeyer said.
He noted that wages and other federal benefits such as Social Security would be taken out, “so it's not as simple as just reporting a net inflow number, net outflow number.”
Kleymeyer also expressed concern over the security of the new data that would have to be reported to the IRS, given the many cybersecurity attacks it faces each year.
“We struggle to see how adding a ton more data to the IRS—personally identifiable information, where they can't protect the current data that they have—makes a lot of sense,” Kleymeyer said.
The Ohio Bankers League urges Americans to pay the taxes they owe, based on the laws that are on the books, but Kleymeyer said the organization doesn’t believe this is the way to go about it.
He also highlighted the “unintended consequence of possibly pushing more folks out of the banking industry,” noting that it may push away the millions of ‘underbanked’ Americans who are wary of the banking industry and the government and have privacy concerns.
“Your money is safest in a examined, regulated financial institution, and we think that it would be a big detriment to our society to push those folks who are maybe on the fence outside of the banking industry just because we think it will help us raise more tax dollars,” Kleymeyer said.
A spokesperson for KeyBank, which is headquartered in Cleveland, sent News 5 a statement about the proposed policy, writing, “The legislative proposal is under active discussion and deliberation in Congress. If the proposal is adopted, and banks are required to provide information to the IRS, KeyBank will contact clients as needed based on any impactful change to their accounts and information.”