IRS proposed bank account reporting rule revised, but Manchin still doesn’t like it

The Biden administration has already scaled back its controversial idea of ​​asking banks to notify the Internal Revenue Service of cash flow information from certain accounts receivable in an effort to ensure the rich pay their taxes in full. .

But the simplified proposal – which would show the total of amounts deposited and withdrawn from accounts above the $ 10,000 level – still doesn’t suit West Virginia Sen. Joe Manchin.

“I said, ‘Mr. President, I don’t know what happened. It can’t happen. It’s fucked up, ”Manchin told listeners at the Economic Club of Washington. Manchin, speaking on Tuesday, is a much-needed “yes” vote for any part of President Joe Biden’s social safety net plans to become law.

Faced with resistance from critics in the banking industry and elsewhere, the Treasury Department announced last week that it would increase the threshold for reporting entries and exits. Now it would be $ 10,000, not $ 600, and the revised plan would exempt employee and federal benefit recipient accounts from the reporting rule.

All in all, the adjustments would mean the reporting rule would not apply to the accounts of around 80% of Americans, Natasha Sarin, the Treasury Department’s assistant deputy secretary for economic policy, said Tuesday later after the Manchin’s comments.

Just over 80% of people have salary income that is already reported to the IRS via W-2 forms, she noted in an interview with the Committee for a Responsible Federal Budget. Rather, the new plan would give better insight into the cash flow position of taxpayers with “opaque” sources of income, she said, such as money from partnerships – which are more common among higher earners.

In its original and revised versions, the proposed statement never said that the IRS would track banking transactions. There has been “disinformation” on this point, the Treasury Department said last week, and Sarin reiterated the point on Tuesday.

Critics say the accounts of ordinary and less wealthy Americans will be mixed up in reporting and this is an unnecessary administrative burden on financial companies.

Manchin hammered the point earlier today. “I said, do you understand how fucked up it is, to think Uncle Sam is going to watch… and what that does for the bankers and this and that?”

The administration and lawmakers are considering an investment of $ 80 billion in the IRS over 10 years to increase the staff of the overburdened agency and overhaul its operating systems. Manchin said Tuesday he was okay with more money for the IRS.

“They’re going to be able to modernize their computer systems and be able to do what they’re supposed to do,” he said – but the idea of ​​the report, in Manchin’s opinion, is not part of what ‘she should do.

Democratic lawmakers are continuing efforts to work out the details of Biden’s “Build Back Better” plan, which would fund programs like more money for the child tax credit and paid family medical leave.

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