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Debt collectors really hate Biden’s IRS reporting proposal for banks

“We believe that this program is costly for all parties, not fit for purpose, and loaded with potential for unintended and serious negative consequences.”

Debt collectors really hate Biden’s IRS reporting proposal for banks
[Source Photos: The White House and greenaperture/iStock]
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Add debt collectors to the list of people who are not happy about a Biden administration plan that would require banks to report account data to the Internal Revenue Service.

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In a letter to House leaders on Monday, ACA International, the trade group that represents the collection industry, joined 40 other groups in the banking and business industries to urge lawmakers to scrap the proposal.

“While the stated goal of this vast data collection is to uncover tax dodging by the wealthy, this proposal is not remotely targeted to that purpose or that population,” the groups wrote. “In addition to the significant privacy concerns, it would create tremendous liability for all affected parties by requiring the collection of financial information for nearly every American without proper explanation of how the IRS will store, protect, and use this enormous trove of personal financial information.”

The letter was addressed to House Speaker Nancy Pelosi, Minority Leader Kevin McCarthy, and other members of the House of Representatives. It’s the latest in a barrage of attacks over what was supposed to be a critical way to raise money for the $3.5 trillion budget reconciliation bill now under consideration.

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As the Wall Street Journal reports, the proposal would require financial services institutions to “report annual inflows and outflows” from individual accounts containing at least $600, thereby giving the IRS an easier way to find tax cheats and conduct audits. The proposal would not require the reporting of individual transactions, according to supporters, despite some of the more exaggerated claims made by bank lobbies.

Still, critics say the new rules would be overly burdensome, especially for smaller institutions, in addition to creating privacy concerns for consumers. ACA International says most of its members are small businesses, with 85% of collections companies having fewer than 49 employees.

For now, it’s unclear if the proposal will survive. According to WSJ, Democrats did not include it in a list of tax-policy changes last week, despite Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig urging that they do so. It’s possible that some scaled-back form could still emerge.

About the author

Christopher Zara is a senior staff news editor for Fast Company and obsessed with media, technology, business, culture, and theater. Before coming to FastCo News, he was a deputy editor at International Business Times, a theater critic for Newsweek, and managing editor of Show Business magazine

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