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The Biden administration on Tuesday backed a smaller version of a proposal that could force banks to hand over customer account information to customers. Internal Revenue Service Under increasing criticism from banking groups and Republicans.

Under a new plan, which is expected to be unveiled by Senate Democrats, banks, credit unions and other financial institutions will be required to report annually on accounts with deposits and withdrawals of more than $10,000, not $600. The limit was what President Biden initially proposed.

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“Today’s new proposal reflects the administration’s conviction that we should zero in on those on top of income who don’t pay their taxes, while protecting American workers by setting bank account limits at $10,000 and exemptions.” provide salaried workers such as teachers and firefighters,” Treasury Secretary Janet Yellen said in a statement.

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Banks are already required to report any transaction over $10,000 to the Financial Crimes Enforcement Network – which is part of the anti-money laundering requirements.

The tightening of the plan follows a steady lobbying campaign by banking groups and other industry associations, which warned the original proposal would increase compliance costs and the already existing burden industry faces in reporting information to the government, Whereas Republicans have slammed it as the worst type of government.

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one in september Letter Addressing House Speaker Nancy Pelosi, D-Calif., and Minority Leader Kevin McCarthy, R-Calif., more than 40 Banks urged lawmakers to vote against such a proposal, warning that it would require all involved. could create a “tremendous liability” for the collection of financial information for most Americans “without reasonable explanation as to how the IRS will store, protect, and use this vast repository of personal financial information.”

“This proposal will create significant operational and reputational challenges for financial institutions, increase tax preparation costs for individuals and small businesses, and create serious financial privacy concerns,” they wrote. “We urge members to resist any attempt to advance this ill-advised new reporting regime.”

The White House defended the plan, writing in a memo to Congressional Democrats that banks and financial institutions are required to provide “a bit of high-level information” on account flows to the IRS, requiring the agency to track the earnings of wealthy Americans from investments. Get more information about. and business activity.

It has emphasized that banks will not have to report individual transactions to the IRS but “basic, high-level information on account inflows and outflows” and will not raise audit rates for Americans of less than $400,000 a year.

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“Imagine a taxpayer who reports income of $10,000, but $1 million flows into their bank account,” the administration said in a memo to congressional Democrats. “Having this summary information will help flag to the IRS when people with higher incomes tend to under-report their income (and overpay their tax obligations).”

The Treasury Department estimated that the original version of the plan could generate up to $700 billion over the next decade, revenue that would be used to pay for the Democrats’ comprehensive social spending plan.

However, despite the reduced scope, Republicans have continued to criticize the bill’s content.

“It’s a terrible idea. It should never see the light of day,” Sen. Pat Tommy, R-Pa., said Tuesday.