(TheIndependentStar.com) – Taxes are something everyone deals with in one way or another. When it comes to income taxes, there are huge debates over how to ensure everyone pays their fair share.
The job of verifying everyone pays income taxes falls on the IRS. The organization works on the basis of a range of tax laws that enable it to collect money due.
Unfortunately, there are plenty of people who are not paying what they should, and new legislation seeks to remedy that. However, banking industry leaders warn the deal on the table may not be the right move to make and could lead to more problems instead of solutions.
President Joe Biden has suggested a new reporting requirement for banks to assist the IRS with tax collection. Under the American Families Plan, financial institutions would have to include the credit and debit information for all accounts in their annual IRS reports.
The idea behind the proposed requirement is to help catch tax evaders and reduce the number of audits on law-abiding taxpayers. Having the additional information would allow the IRS to compare cash flow to reported earnings and check for discrepancies.
Under the plan, President Biden expects to provide the IRS with $80 billion over 10 years to fund the process. The administration projects having the extra information would increase IRS revenue by $700 billion in 10 years.
Florida Bankers Association CEO Alex Sanchez expressed serious concerns over the new financial reporting requirements on Fox Business’ Mornings with Maria. He said the proposal would end community banks and “hurt regional banks.” As a consequence, this would negatively impact small businesses who get most of their funding from these smaller institutions.
Sanchez explained that sending information on the banking actions of every single person is “unbelievably ridiculous” and there are more efficient ways to ensure people pay their taxes.
Executive Vice President of Congressional Relations at the Independent Community Bankers of America Paul Merski also made comments, saying the proposal would increase the costs of remaining compliant and add to the burden on banks. He compared this legislation with every American sending their bank account statements to the IRS monthly. Merski opined the IRS can’t even handle that much information and that the change would just add to an already overwhelmed system.
Democrats have set a goal date of September 15 to provide Congress with a revised version of the American Families Plan. Will the new banking regulations remain, or will legislators take the advice of banking professionals that the bill could damage the industry?
Copyright 2021, TheIndependentStar.com