To help fund its new initiatives, the Biden administration wants banks to report more customer information. Account holders aren’t happy
Jill Castilla, chief executive of the one-branch Citizens Bank of Edmond, outside the bank in Edmond, Okla., on Wednesday, Oct. 6, 2021.
Banks already submit tax forms to the IRS about the interest that customer accounts accrue. But the new proposal would require they share information about account balances so that the IRS can see if there are large discrepancies between the income people and businesses report and what they have in the bank. The IRS could audit or investigate the gaps to see if those taxpayers are evading their obligations.
Top Democrats say that empowering the IRS is key to making the economy more fair. Sen. Elizabeth Warren of Massachusetts has warned that the IRS is handicapped when it comes to tracking the income of the wealthiest. Banks say the reporting requirements would raise their costs and put them in the unenviable position of handing customer information over to the IRS.
Trade groups also helped gather signatures for a Sept. 17 letter to congressional leaders complaining about the proposal. Industry representatives say it is unusual to see banks communicate with their account holders on a political matter. “This is the first time in 20 years that I’ve seen that banks have reached out to inform their customers on an issue” like this, said Paul Merski, who runs congressional relations for the community bankers association.
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