Janet Yellen still supports plan to get banks to give something new to the IRS

WASHINGTON — Treasury Secretary Janet L. Yellen said on Tuesday she still supports a tough proposal that would require banks to turn over additional information about their customers’ accounts to the Internal Revenue Service, arguing that the proposal would help ensure the rich don’t run out of money. tax evasion.

The idea of ​​bank reporting was at the center of the Biden administration’s plan to narrow the $7 trillion “tax gap”—the gap in taxes owed but not collected—and help pay it off. $2.2 trillion in social policy and climate legislation Democrats are trying to beat this year. after severe Reaction from banks and RepublicansEvaluating the idea as a violation of privacy, it was removed from the bill passed by the House of Democrats this month.

The Biden administration hopes that a more modest version of the proposal can get the Senate into its version of the bill. Ms Yellen said she still supports the concept of banks sharing data for accounts with total annual deposits or withdrawals of more than $10,000, with exceptions for wage earners or people receiving federal benefits such as Social Security.

“I support this,” Ms. Yellen said at the Senate Banking Committee session. “I think it’s important for the IRS to be able to see opaque revenue streams, and it’s an important way to improve tax compliance.”

Republicans insisted that the IRS could not be trusted because of additional data. recent leaks taxpayer information and the organization’s history of targeting political groups.

Republican Senator Bill Hagerty said: “Certainly, my voters cannot turn a blind eye to this aspect of the Build Back Better plan, which will give more power and increase the budget tenfold to spy on more Americans, control more Americans and invade our privacy.” “Tennessee,” he said.

Yellen said the plan was not an attempt to “spy” on taxpayers or gather detailed information about their banking activities.

“The burden on financial institutions was minimal and there were no attempts to target those with real incomes below $400,000,” Yellen said.

While the bank reporting mandate’s chances of getting into eventual legislation look slim, Democrats are counting on an $80 billion investment to expand the IRS’ enforcement capacity to generate additional $400 billion in tax revenue over the next decade. This forecast, which is more optimistic than the Congressional Budget Office estimates, allows the Biden administration to argue that the new spending will not increase the national debt.

“These are crucial resources needed to ensure that the wealthiest individuals, and especially companies, comply with tax laws and pay their fair share of money,” Yellen said.

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