Congress just went on recess for the summer. And right before that the Senate passed a resolution to send to the house.

This resolution has a lot in it (heck it’s a 3.5 trillion dollar resolution!). In the coming days we will hear a lot about the tax rate increases. The fights over the child care tax credit. Whether property can pass to the next generation with or without being heavily taxed. What this will do to the national budget.  And many professionals, along with myself, will update you on those items.

While passing this there was a period of amendments being added. It’s often done quickly and one of them has me truly concerned. 

It has been discussed since early 2021 by Biden and included in many blue prints- a financial reporting proposal that would have banks reporting the combined inflows and outflows of bank accounts. 

So what does that mean? That all of your bank accounts (savings, checking, investments) would be sending data to the IRS that shows : total money in and total money out. 

An attempt to block it was stopped this last week. 

This is set to apply to business and personal accounts

The argument is this will close the gap (what taxes should be paid vs what are collected) and allow Congress to pay for the additional credits and deductions they want to implement.  

There are so many other ways to “skin the cat” in this case. Congress can fund the IRS better and increase agents for audits. They can fund better technology to allow for better data analysis. Congress can simplify laws. Eliminate deductions. Tax different types of revenues. Any of these would be preferred to additional financial reporting. 

I’m terrified, y’all. I see three main issues with this; invasion of privacy, increase in audits, increase in bank fees. 

This is a slippery slope. For now, sure, it’s just combined amounts. But what if a future administration wants to know exactly who paid you? Or whether you shopped at certain stores? Or ate at certain restaurants.

Increased audits. Currently the IRS is underfunded. They haven’t even made it out of the backlog of work the pandemic threw on them. Adding additional data matching? We will see increases in notices sent to taxpayers and no one on the IRS side to handle that. Anytime what your bank says your account processed doesn’t align with your tax return- I imagine a notice will go out. That you will have to call or write to the IRS to handle. Or pay a professional to do so. It will be a headache all around. 

Finally- increased bank fees. Implementing and reporting this data will cost the banks. And more often than not, the bank will pass that along to you in the form of fees or decreased interest rate payments. This will inevitably affect the average American. Which is the exact opposite of what the administration tells us they want to do. 

What’s next? While Congress is on recess they are supposed to be out talking to constituents. They hope to have this debated and moving toward votes in the middle of September. So it is time for all of us to call, write, and speak up. This “blueprint” proposal needs to be stopped before the overreach can never be drawn back.

 

Have more questions? Head over to instagram and follow me there. We will be chatting about this!