Idaho Sen. Crapo, bank leaders gather in opposition to proposed IRS changes
Local bank executives say additional reporting requirements would invade privacy
Center: Sen. Mike Crapo, R-Idaho, speaks at a roundtable discussion with business leaders at the Idaho Capitol on Tuesday. Idaho State Treasurer Julie Ellsworth, bottom left, and Idaho State Controller Brandon Woolf, bottom right, were also in attendance (Screenshot).
Editor’s note: A previous version of this story misstated the proposal by the Biden administration. This has been corrected.
Sen. Mike Crapo held a roundtable discussion at the Idaho Capitol on Tuesday with several representatives from local banks and wealth management firms to discuss his concerns about proposed changes to the Internal Revenue Service that would enhance enforcement efforts, saying the changes constitute government overreach and an invasion of privacy.
The discussion included Idaho State Treasurer Julie Ellsworth and Idaho State Controller Brandon Woolf, as well as the chief executive officers of D.L. Evans Bank, Idaho Central Credit Union, CapEd Credit Union and Western Idaho Zions Bank.
The discussion was prompted by a proposal from President Joe Biden’s administration to double the size of its enforcement staff with an $80 billion increase that would also change reporting requirements from banks on accounts with at least $600 or at least $600 worth of transactions. U.S. Treasury Secretary Janet Yellen has stated the change would help IRS officials more effectively audit the wealthiest earners in America and raise more revenue for government investments. Banks are already required to report interest paid on accounts when it exceeds $10.
“I think it’s important to recognize that we have a tax gap that’s estimated at $7 trillion over the next decade,” Yellen said in a recent congressional hearing. “That is taxes that are due and are not being paid to the government that deprive us of the resources we need to do critical investments to make America more productive and competitive. … There are a class of partnerships, businesses, high-income individuals who have opaque sources of income that the IRS doesn’t have direct information about, and that’s where the tax gap is, not low-income people.”
Crapo said the $600 threshold would include almost every American with more than a lawn mowing job.
“It includes virtually the entire economy,” Crapo said, “and it gives the IRS the ability to go in and mine this data.”
According to reporting from the New York Times, U.S. Treasury officials say the change would not be meant to track individual transactions and was set at a low amount to exclude accounts with little use while still providing comprehensive data. After pushback from banking lobbyists, who say the requirements would raise costs for banks and raise privacy concerns with customers, the administration is contemplating raising the $600 threshold to $10,000 instead.
“It doesn’t matter to me if it’s a penny or a billion dollars, wrong is wrong,” said Kent Oram, president of Idaho Central Credit Union. “I don’t think there’s any number that justifies this.”
Crapo said he would be in favor of additional funding for the IRS to upgrade its computer and software programs and increase cybersecurity efforts. He added that if people want to make sure the wealthiest Americans pay their fair share of taxes, it should come in the form of changes to the tax code, because most cases of what is considered tax evasion are legal based on existing law.
“If we don’t want those kinds of policies in our tax code, we can eliminate them,” Crapo said. The solution is not to provide “the data to go into the bank accounts and financial transactions of every American and see if they can just drive up the number of compliance dollars that they can squeeze out.”
Crapo has introduced the Tax Gap Reform and IRS Enforcement Act bill in response to the idea, but the legislation has not yet been considered by a committee. He encouraged those in attendance to contact their representatives and alert their social circles about the proposal.
Crapo told the Idaho Capital Sun he is aggressively raising campaign funds but will announce if he is running in 2022 in January. In his last campaign in 2016, Crapo received $342,250 in campaign donations from commercial banks, and $888,600 from securities and investment donors, according to OpenSecrets.
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