Must be better way to catch tax evasion

President Joe Biden’s administration says the intention for proposing a controversial plan to monitor private bank accounts is to catch tax cheats.

But when looking at the actual language of the proposal, there must be a better way.

One of many wish-list items on the Treasury Department’s proposed fiscal 2022 budget, the plan would force banks to report information about transactions for all accounts worth $600 or more to the Internal Revenue Service. Only aggregated data would be reported — not individual transactions.

Banks and credit unions are against the proposal.

“The government has no business monitoring financial account transaction histories,” Citizens Bank of Clovis President Kent Carruthers wrote in a guest column for The News earlier this month.

“The proposal will hurt small businesses, risk double-counting their income, and increase their tax burden and audits.

“IRS data collection is an invasion of privacy, and the IRS already collects enough information to watch for tax evaders.”

Carruthers is not alone in his concerns.

“This indiscriminate, comprehensive bank account reporting to the IRS can soon be enacted in Congress and would create an unacceptable invasion of privacy,” the Logansport, Ind.-based Security Federal Savings Bank said in a recent statement to its members.

“This IRS bank account profiling is intrusive and compromises your privacy.”

The Biden administration claims it’s difficult to identify people underreporting their taxes, and by automatically having the bank account information, the IRS can more accurately identify balances that don’t match with the corresponding returns.

Banks are against the proposal for several reasons. First, it would create more work for the banks, which would need to send the data to the IRS. Banks also have security concerns on whether the IRS can handle the data without being breached, and do not want to jeopardize their members’ private information.

Although the Biden administration’s plan generated a lot of reaction, the likelihood of Congress going along with it is slim, and passing it through the divided Senate would be near-impossible. The proposal was likely included in the budget as part of a negotiation tactic, to be dropped as a concession for something else.

If the administration was really focused on catching tax cheats, there are much more effective ways, like increasing staff at the IRS and updating its systems to current technology.

Share alternative ideas with your U.S. and state representatives from New Mexico and let them know where you stand on the Biden administration’s plan.

— Pharos-Tribune (Logansport, Ind.)

and The Eastern New Mexico News