Idaho’s Sen. Crapo fighting Biden proposal for banks to report customer data to IRS

Idaho’s U.S. Sen. Mike Crapo hopes to stop a federal proposal that would require banks to share more customer data with the Internal Revenue Service.

The Treasury Department’s proposal would mandate that financial institutions share data on accounts if those accounts have at least $600, or have deposits or withdrawals of more than $600 in a year. It would not monitor individual transactions. Though Democrats have since said the threshold could be raised, Crapo said no increase would justify what he calls government overreach and a privacy invasion.

Democratic House Speaker Nancy Pelosi on Tuesday said the requirement will remain in Democrats’ social-spending package, though the threshold of total activity could increase from $600.

“We’re looking at a phenomenal abuse of the authority,” Crapo said Tuesday at the Idaho Capitol, where he held a roundtable discussion with bank officials and business owners. “I think this is the biggest violation of personal privacy that has ever even been proposed ... by the United States government, and it’s something every American ought to be incredibly worried about.”

The Treasury Department’s proposal would be included in a $3.5 trillion social spending package. Republicans have pushed for the proposal to go through a committee. If it did, it could be discussed by the U.S. Senate Finance Committee, where Crapo is a ranking member.

Crapo and U.S. Rep. Kevin Brady, R-Texas, a ranking member on the U.S. House Ways and Means Committee, introduced a bill that would prohibit increasing audits for taxpayers making less than $400,000 a year. That bill would need to go through the Finance Committee.

Treasury says proposal would strengthen IRS’ ability to find unpaid taxes

The Treasury Department has defended the policy as a way to help the IRS crack down on wealthy Americans who have skirted paying an estimated $7 trillion in federal taxes. The proposal follows a ProPublica article that examined thousands of tax forms and found that billionaires — including Jeff Bezos, Elon Musk and George Soros — at times paid no federal income taxes.

The leak to ProPublica shows that the IRS cannot be trusted to keep private tax information confidential, Crapo said. Others expressed concerns that the IRS is incapable of keeping such private data secure from cybercrimes.

Crapo said that if there’s a problem with unpaid taxes, the fix would come from closing corporate loopholes, not surveillance on taxpayers.

“The solution is not to give the IRS the ability to get into everybody’s assets, but the solution is for Congress to change the tax laws,” Crapo said, “because most of these cases, I’m told, is by absolutely legal compliance with existing tax law.”

John Evans Jr., president and CEO of Albion-based D.L. Evans Bank, said the proposal would be a significant burden for banks, small businesses and credit unions.

“Bankers firmly believe that Americans should honor their tax obligations,” Evans said Tuesday. “The regulatory burden that it would create for all of us is just unbelievable.”

State officials react to Treasury Department proposal

Republican State Treasurer Julie Ellsworth said no amount of increase to what now is a $600 threshold would garner her support. She was one of 24 state treasurers who wrote a letter opposed to the the reconciliation bill and increased powers to the IRS.

“It is an egregious overreach,” Ellsworth said Tuesday.

State Controller Brandon Woolf on Tuesday said public trust in the federal government has been at an all-time low in a decade. Efforts by his office to increase trust in government, such as creating the Transparent Idaho website and making all state transactions publicly accessible, is undermined by such policies.

The rest of Idaho’s congressional delegates — U.S. Sen. Jim Risch, and U.S. Reps. Mike Simpson and Russ Fulcher — also oppose the proposal.

“The Biden administration’s latest proposal to require banks to report financial activities over $600 to the IRS is absolutely absurd,” Simpson said in a statement. “This is clearly a violation of individual privacy, not to mention a hugely inappropriate government overreach.”