Missouri Becomes Latest US State to Defy Biden's Plan to Monitor Transactions of Over $600
Missouri and Arkansas became the latest states to revolt against US President Joe Biden’s proposal to require banks and other financial institutions to report transaction data over $600 to the Internal Revenue Service (IRS) on Wednesday.
State Treasurer Scott Fitzpatrick told reporters
that Missouri would not comply with Biden’s tax plan, and that it was illegal under state law, calling it a “gross violation of Missourians’ expectation of privacy when it comes to their personal financial records.”
“I will stand up to this government overreach and protect the privacy of those account holders. I will not turn this information over to the IRS voluntarily and will fight in court to block any attempt by the federal government to compel my office to comply with this mandate,” Fitzpatrick said in a Wednesday statement.
Arkansas Treasurer Dennis Milligan told
the Daily Mail he would not hand over citizens' private bank data to the IRS either.
“It would be absolutely absurd for me to turn over their private account data regarding money they’re saving for their loved ones’ future to the IRS, and I do not intend to do so,” he said. “I would do all I could in my role to not comply with this proposal.”
The proposal would require banks to report gross inflows and outflows to the IRS, including transactions from Venmo, PayPal and crypto exchanges, in an effort to fight tax evasion.
Four states have now promised to defy the policy tucked into the $3.5 trillion budget reconciliation plan, including West Virginia and Nebraska.
West Virginia state Treasurer Riley Moore reportedly
described the IRS plan as an “unconstitutional invasion
” that no state should comply with.
Moore told the Daily Mail that big banks who supported Biden would be the ones benefiting from this proposal, and compared the impact it was going to have on community banks to “Dodd Frank on steroids.”
“The $600 requirement is absolutely unconstitutional. It's a massive invasion of privacy, it’s a huge government overreach. I don't think any state should comply with this,” Moore continued.
So far, 24 state treasurers, auditors and financial officers have signed a letter opposing the policy.
“This would be one of the largest infringements on data privacy in our nation's history and is a direct assault on the financial disclosures of all Americans,” Moore added.
The letter emphasizes that the proposal would increase the number of unbanked Americans and deepen the distrust of financial institutions.
As the majority of Republicans oppose the potential tax reporting legislation, Sen. John Barrasso (R-WY), also cried out his concerns. “The Republican Party is not going to let the IRS spy on bank accounts,” the Wyoming Republican told reporters at the Capitol Tuesday.
“We are not going to allow Joe Biden to give the IRS more power, we want to stop this in its tracks.”
US Treasury Secretary Janet Yellen defended the proposal, saying that it was a simple way for the IRS to clarify the implications of an enormous tax gap in the US estimated at $7 trillion over the next decade.
“It's a simple way for the IRS to get a sense where that might be – it's just a few pieces of information about people's bank accounts,” Yellen told CNBC's Squawk Box on Tuesday.
Yellen provided no additional details on how tracking account inflows and outflows will serve to close the tax gap other than the data reflecting on the tax filing process.
While this provision was not initially included in the House Ways and Means Committee markup, House Democrats plan to push the proposal during the Rules Committee markups.