So-called tax gap plan could let the IRS look into any account with as little as $600
WICHITA (KSNW) — The IRS wants to increase funding by $80 billion to go after tax cheats, but some say it could open your account and transactions to the IRS if you have as little as $600 in any account.
"We don't know what all is going to happen with the pending legislation and what has been proposed. We are a little bit fearful of it," said Travis Carr, president of Community Bank in Wichita. "You know many times we're asked to be the eyes and ears for the government."
Carr says reporting is nothing new. And he is clear, he is not getting into the politics of the proposal from the IRS and the government.
Republican lawmakers have been firmly against the idea. U.S. Rep. Ron Estes, R-Kan., is co-sponsoring a bill to be introduced into Congress to curb the idea.
"Prying open the bank statements and Venmo accounts of Kansas families and small businesses is another example of gross overreach of the Biden administration," said Rep. Estes.
Estes also said it would be a reporting nightmare for smaller banks.
"We just don't know yet, what it all means," said Carr. "Obviously, we take privacy in our customers very seriously, and it's concerning to us that we may have to, in some form or fashion, report back on some of these transactions."
The plan passed the U.S. Senate. It is in Congress right now.
Legal analysts say we have seen plans like the current proposal before.
"These are the problems that lie before the gate to our brave, new digital world," said KSN legal analyst Dan Monnat. "For 45 years, Americans have not had much right of privacy in their banking records. Because in 1976, the United States Supreme Court held that you can't have a right of constitutional privacy in transactions and records that you willingly place in the hands of a third party like a bank."
Monnat says that the case may not hold in the future. In 2018, there was a U.S. Supreme Court case that had a different take.
"But it might be under the analysis of the United States Supreme Court in 2018. Because in that year in the Carpenter case, a cell site location information case, the United States Supreme court held that in this pervasive, digitized world of the cloud, you no longer lose your right to constitutional privacy by placing your records in the hands of a third party," said Monnat. "Now, it remains to be seen whether that ruling in the Carpenter case will apply to banking records. But it certainly might."
The overall infrastructure bill passed the Senate last month. Both Kansas senators voted against it. Representatives are back in Washington next week, and they will get a look.