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Tim Aiken

Tim Aiken

Sen. Joe Manchin’s recent comments objecting to a Biden administration proposal that would require banks to report their customers’ aggregate account information to the Internal Revenue Service were well received by community bankers and consumers across West Virginia.

With the proposal polling badly among voters and eliciting vociferous consumer opposition, Manchin, D-W.Va., is in good company in deeming it a gross and ineffective overreach by the federal government.

The IRS reporting proposal is intended to close the tax gap between what American taxpayers pay and what they owe, to help fund the spending bill Congress is currently debating. But the comprehensive, untargeted nature of the proposal continues to elicit broad opposition, not just from bankers who would be required to report their customers’ financial information to the IRS, but from consumers whose data the agency would be collecting.

A national Morning Consult poll found 67% of American voters oppose this proposal, including more than half of Democrat voters. Many Americans are responding that IRS monitoring of their personal financial account information violates their privacy, neglects their right to due process, by assuming taxpayers are guilty until proven innocent, and puts their information at risk of a breach at the agency, which is already investigating a high-profile tax return leak. Further, the plan threatens to drive consumers away from the banking system — reversing a bipartisan initiative to reduce the number of unbanked people.

While policymakers are attempting to quell the public backlash against the proposal, by increasing the reporting threshold and excluding specific deposits like payroll and certain government payments, the plan is not salvageable. The proposed tweaks would benefit few taxpayers, make the policy more difficult to implement and do nothing to address the proposal’s concerns related to privacy, due process, data security and the unbanked.

The Independent Community Bankers of America — a national organization for which I volunteer as secretary — has been sounding the alarm on this proposal for months. Most recently, this group and nearly 100 other business and financial services organizations called on President Joe Biden to withdraw the proposal, because it is overly broad and disconnected from its purported purpose of focusing government scrutiny on higher-income Americans.

Instead of using a “dragnet” approach to harvest heaps of new taxpayer information, the IRS should make better use of the information it already has at its disposal. The federal government does not need to collect information on virtually every American in West Virginia and across the country.

With Congress working to advance the proposal through a budget reconciliation package that requires only a simple majority to pass, community bankers thank Manchin for taking a stand for every West Virginian by questioning this intrusive and indiscriminate proposal.

Tim Aiken is president and CEO of Union Bank Inc., in Middlebourne, and secretary of the Independent Community Bankers of America.

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