Purpose of Securing Tax Revenue Through Eradication of Tax Evasion... Financial Industry Opposes "Must Be Rejected by the Assembly"
[Asia Economy Reporter Park Byung-hee] The U.S. Democratic Senate has proposed a bill requiring accounts with annual transaction volumes exceeding $10,000 (approximately 11.77 million KRW) to report their information to the Internal Revenue Service (IRS), according to reports by The Wall Street Journal (WSJ) and others on the same day. After President Joe Biden proposed a bill to report bank transactions over $600, the bill faced strong opposition from Republicans and the financial industry, leading the Democrats to present a new proposal aimed at reducing resistance.
President Biden pushed for legislation to report high-value bank transactions to the IRS shortly after taking office. The goal was to prevent tax evasion and enable the IRS to collect more taxes, thereby securing funding for future large-scale infrastructure bills.
The Wall Street banking sector strongly opposed the measure, arguing that reporting bank transaction details would increase banks' costs and pose risks of personal financial information exposure. Republicans also sided with the financial industry's stance and opposed the bill.
In response, the Democrats adjusted the disclosure threshold upward and presented a new proposal to appease opposition from Republicans and the financial sector. They also decided not to include wages or pension benefits in the $10,000 annual disclosure threshold. Initially, President Biden had proposed reporting all transactions over $600 without exceptions.
Democratic Senator Elizabeth Warren said, "For a long time, large corporations and the wealthy have manipulated the taxes they owe," adding, "This measure will allow the IRS to tax the money of the wealthy deposited into bank accounts but not reported on income tax returns."
Treasury Secretary Janet Yellen also expressed support, stating, "This measure reflects the Biden administration's strong determination to bring to zero the number of top high-income earners who do not pay the taxes they owe."
However, the financial industry still expressed concerns, saying the bill remains burdensome and could cause many problems. Although the disclosure threshold was raised, the financial sector argued that sharing personal financial information with the IRS is still an excessive requirement. Regarding the exclusion of wages and similar income from the disclosure threshold, some pointed out that it could cause confusion for financial companies about which accounts need to be reported.
Rob Nichols, president of the American Bankers Association, stated, "If this bill is enacted, it will raise issues regarding personal information, increase costs for individuals and small businesses, and cause operational difficulties for community banks," urging Congress to reject the bill.
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