Another Washington Post fact-checker is being ridiculed on social media after claiming that a Biden administration proposal to empower the Internal Revenue Service to require banks to report all transactions amounting to $600 or more isn’t akin to spying on Americans’ financial activities.
In the fact-check story, “No, Biden isn’t proposing that the IRS spy on bank records,” Salvador Rizzo writes, “President Biden wants the IRS to gather more information from individual bank accounts to discourage tax-dodging and round up more money for his agenda. After Democrats watered down his proposal in response to Republican concerns, GOP senators nonetheless took turns describing it as an unprecedented invasion of privacy.”
He went on to say that GOP lawmakers are voicing concerns that the initiative will lead to the mass collection of “intimate financial details” of American banking customers, handing the data over to “spies” working for the IRS.
“Nope. The Democrats’ proposal was never that intrusive and now is much more limited. No intimate details about any transactions would be reported,” Rizzo claimed.
He went on to sketch the outline of Biden’s proposal, which he admits is to “bulk up enforcement at the IRS” by putting on additional agents “and expanding some reporting requirements.”
Rizzo then echoed claims made by various Biden administration officials including Treasury Secretary Janet Yellen who said the increased enforcement effort would bring in some $320 billion more in tax revenues over a decade. Biden would then use those funds to pay for some provisions in his massive $3.5 trillion “Build Back Better” plan, though Rizzo notes some tax experts from nonpartisan organizations have said they doubt the stepped-up enforcement measures would result in the collection of that much additional tax revenue.
After noting that it’s not easy for American wage earners who file W-2s to evade federal income taxes, Rizzo noted that the crux of the administration’s plan is to go after “more obscure income sources” that are not subject to “third-party reporting.”
Rizzo then adds:
The initial version of the Democrats’ proposal would have required financial institutions to provide the IRS with two new figures every year: the total inflows and outflows for any bank account with more than $600 in annual deposits or withdrawals, “with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner.” The requirement would apply to all business and personal accounts at financial institutions.
After Republicans raised concerns that the $600 minimum would sweep up almost all Americans, Democrats raised the proposed threshold to $10,000. In addition, they proposed that all wages and federal benefits such as Social Security be exempted from the threshold.
“To be clear: The financial reporting proposal does not include reporting on individual transactions of any amount,” said a Treasury Department fact sheet. “Instead, banks would add two additional data points to the information that is already supplied to the IRS: how much money went into the account over the course of the year, and how much came out.”
But Sen. Mike Crapo of Idaho, the ranking Republican on the Senate Finance Committee, said even the higher threshold will ensnare most Americans.
“The average American runs over $61,000 through their account, on housing ($20,000), transportation ($9,000), personal insurance and etc. ($7,000), the list goes on,” he said, quoting Bureau of Labor Statistics information.
“We’re going to give all kinds of personal, private information about American citizens to the same IRS that famously discriminated against conservative organizations seeking tax-exempt charters?” noted Sen. Patrick J. Toomey of Pennsylvania, who is the ranking Republican on the Senate Banking Committee.
“We are talking about some of the most private of information being shared, turning bank presidents, bankers, community bankers, credit-union lenders and clerk tellers into spies for the IRS,” added Sen. Kevin Cramer (R-N.D.).
However, Rizzo insisted, “this level of scrutiny does not appear anywhere in the Democrats’ proposal,” before quoting Samantha Jacoby, “a senior tax legal analyst at the left-leaning Center for Budget and Policy Priorities,” who called Republican statements and concerns “complete fabrications.”
He also quoted Garrett Watson, a senior policy analyst at the right-leaning Tax Foundation who said that the new reporting requirements may trigger audits, while not agreeing with some Republican senators’ statements.
But Watson appeared to agree that the proposal, even with a $10,000 threshold, would force banks to provide transaction information to the IRS, as Republicans have charged.
“The IRS reporting proposal would share aggregate inflow and outflow information on a subset of bank accounts based on the $10,000 threshold (potentially excluding certain income sources, such as wage income through direct deposit),” Watson said in an email. “It’s worth noting, however, that this information may trigger audits in certain situations, which would then potentially include a more detailed examination of bank account activity that otherwise would not happen. The Treasury Department has noted that the audit focus would be on those earning over $400,000, but it’s not clear how this would be measured as a counterfactual or how this would play into IRS auditing decisions.”
Social media users responded to the Post’s fact-check with incredulity.
If you're going to post this link, you are really obligated to defend the reasoning put forth in the article. And good luck with that. https://t.co/czMWje1nQ2
— Mark Hemingway (@Heminator) October 20, 2021
“He’s not proposing that the IRS spy on bank accounts. He’s just proposing that the banks provide information that will make spying on the bank accounts via subpoena much easier”
— Heimish Conservative (@HeimishCon) October 20, 2021
Ha! Second to last paragraph: “And just before this GOP news conference, Democrats had curtailed their proposal to cover fewer Americans and to exempt all wages and federal benefits from the new requirements.”
So clearly there had been nothing to be concerned about! https://t.co/LqXNmLSGSK
— Jeryl Bier (@JerylBier) October 20, 2021
whatever you want to call it, This proposal is the biggest shakedown of the middle class that’s ever been publicly aired as a policy idea. Enjoy getting crushed in the midterms!
— Lisa (@Rockprincess818) October 20, 2021
Lol. Just any transactions above $600.
So just about every week when most people get paid.
— Great Scottie (@_GR8_Scott) October 20, 2021
This is meant to crush small independent contractors or day laborers who may get paid cash for their work. It is not aimed at rich people at all. Lets just be honest about it and then debate whether the policy is desirable.
— Teddy Cohen (@TeddyCohen133) October 20, 2021
Good objective, but even at $10k threshold that will cover most active bank accounts and require extensive cross ckecking via computers to identify whether deposits are covered by W-2 reporting so as to exclude those deposits. Big Brother is becoming more powerful every day.
— J Waller (@j_waller3) October 20, 2021
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Jon is a staff writer for BizPac Review with 30 years' worth of reporting experience, as well as an author and U.S. Army veteran. He has a BA in political science from Ashford University and an MA in national security studies/intelligence analysis from American Military University.
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