Sen. Lummis slams Yellen over $600 IRS reporting requirement
Yellen defended the proposal, saying that there is a 'tax gap' that needs filling
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Sen. Cynthia Lummis, R-Wyo., on Tuesday let loose on Treasury Secretary Janet Yellen over the Biden administration's proposal to force banks to report to the Internal Revenue Service on every transaction Americans make that is $600 or more.
"There are obvious privacy concerns for all Americans here and this represents a dramatic new regulatory burden for community banks and credit unions in Wyoming and elsewhere," Lummis told Yellen of the proposal, which is one of several aimed at helping to pay for President Biden's multitrillion-dollar plans for expanding social programs and fighting climate change.
Lummis said, "Banks will have to hire contractors to rat on their customers," and scolded, "Bank customers are not subjects to the federal government. Banks do not work for the IRS."
The senator suggested Americans would "find alternatives to traditional banks just to thwart IRS access to their personal information, not because they're trying to hide anything but because they're not willing to share everything."
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"My question is: Are you aware of how unnecessary this regulatory burden is?" Lummis asked Yellen. "Do you distrust the American people so much that you need to know when they bought a couch? Or a cow?"
Yellen told Lummis she disagreed with the senator's assessment, suggesting that Lummis might misunderstand the proposal.
"Banks already report directly to the IRS the interest that they pay on accounts when it exceeds $10, and this is not a proposal to provide detailed transaction level data by banks to the IRS," Yellen argued. "It is a proposal to add two additional pieces of easily ascertained information onto the 1099-INT form the banks already file."
The treasury secretary then went on to defend the new proposal, praising it as a way to bring in more money for the feds.
"I think it's important to recognize that we have a tax gap that's estimated at $7 trillion over the next decade," Yellen said. "That is taxes that are due and are not being paid to the government that deprive us of the resources that we need to do critical investments to make America more productive and competitive."
Yellen pointed out that the IRS already has "a wealth of information about individuals," citing examples such as the W-2 form filed for a person's job, but said the IRS needs more information on "higher-income individuals who have opaque sources of income … not low-income people."
"Well, $600 threshold is not usually where you're going to find the massive amount of tax revenue you think Americans are cheating you out of," Lummis replied.
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Yellen conceded, "That's correct, but it's important to have comprehensive information so that individuals can't game the system and have multiple accounts."
The White House estimates that the proposal to monitor all transactions of $600 or more could bring in roughly $463 billion in additional revenue over the next decade through IRS enforcement actions.
FOX Business' Megan Henney contributed to this report.