WASHINGTON, D.C. – Americans are still unclear on whether the Biden-Harris Administration will, on its way out the door, revive a plan to have the Internal Revenue Service (IRS) surveil everyone’s private bank transactions by creating an invasive financial reporting scheme. The Biden-Harris Administration proposed the bank surveillance program in 2021, which would turn local banks into extensions of the IRS with required reporting of nearly all customer financial information. 

While Congressional Democrats abandoned this proposal due to overwhelming public opposition, Biden-Harris officials still have not completely disavowed the scheme or their efforts to target working Americans. In fact, in just the past few days, the Biden-Harris IRS announced its plans to unlawfully re-write the reporting threshold of the Washington Democrats’ 1099-K policy – a burden on taxpayers that will bury gig workers under a mountain of paperwork, with over 90 percent of the tax burden falling on Americans earning less than $200,000. They must know this plan is also unpopular – why else would they delay its full implementation for the third time in three years? 

Yet, buried deep in the IRS’ recent announcement to delay the implementation of the Democrats’ 1099-K policy is a requirement that all Americans using 1099-K issuing platforms provide a taxpayer information number to the platforms regardless of whether the taxpayer receives a new 1099-K under the new thresholds or not. This is an information power grab by the Biden Administration on the way out the door.

House Ways and Means Committee Chairman Jason Smith (MO-08) issued the following statement on the Biden-Harris administration’s bank surveillance scheme:

“Congressional Democrats abandoned the invasive scheme to have the IRS surveil every Americans’ bank accounts due to massive public opposition – so why have Biden-Harris officials refused to disavow it completely? No innocent American wants to have tax collectors snoop through their personal bank records, especially when they have so little confidence their personal information will be kept private.”

The IRS has a history of privacy leaks, abuse of power, and targeting individuals for their political beliefs. Additionally, Democrats have demonstrated their desire to inflate the unchecked power of the IRS, which would only further compound IRS’s systemic and unaddressed data protection problems by putting even more private financial information at risk. 

The IRS bank account surveillance proposal would place an unnecessary burden on financial institutions, especially small community banks, with the annual reporting of gross inflows and outflows “with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the owner.” This onerous requirement would apply to both personal and business accounts with a gross flow of more than $600, leading to the invasion of privacy for everyday Americans whose financial transactions would otherwise have no reason for government supervision. 

Background:

• On June 10, 2021, numerous bank associations sent a joint letter to Congress regarding the Biden-Harris Administration’s proposed financial reporting regime. The banks said, “putting financial institutions in the position of reporting more information on their account holders is not the answer.”
• On September 16, 2021, Ways and Means Republicans released a fact check to correct the record on the Biden-Harris Administration’s misleading “Tax Enforcement Fact Sheet.” The Administration falsely claimed their proposal would only require banks to report two pieces of information. In reality, it demanded unlimited transaction level information from both individual and business bank accounts.
• On November 30, 2021, Treasury Secretary Yellen testified before the Senate Banking Committee and voiced her continued support for the bank surveillance scheme that had been dropped from congressional Democrats’ legislation the month prior due to fierce opposition from the public. 
• On October 27, 2022, Ways and Means Republican members wrote to Treasury Secretary Yellen seeking answers about whether the Biden-Harris Administration intended to renew any version of its “Comprehensive Financial Account Reporting”—aka Bank Surveillance—proposal.