Treasury Secretary Janet Yellen is defending a Biden administration proposal that would require banks to report data to the Internal Revenue Service on transactions over $600, calling the collection of information “routine,” after taking heat for the idea that is widely seen as an unprecedented invasion of privacy.
During an interview on CNBC’s Squawk Box on Tuesday, Yellen was pressed on whether the IRS has the “wherewithal” to collect more information about taxpayers and bank accounts including cash flows, something many Republicans have called it invasive.
“Well, of course they do,” Yellen said. “Right now, on every bank account that earns more than $10 a year in interest, the banks report the interest earned to the IRS. That’s part of the information base that includes W2’s and reports on dividends in other income that taxpayers earned. So collection of information is routine.”
Yellen cited the “enormous tax gap” in the US as the reason behind the proposed tax hikes and information collecting, blaming the gap on places where information on income “can be hidden.”
“It’s just a few pieces of information about individual bank accounts, nothing at the transaction level that would violate privacy,” the secretary said.
The collected information would ostensibly help the Treasury Department determine which high-income wealthy individuals may be concealing transactions and income, and “these would be helpful indicators of where it would make sense for auditing to occur,” she added.
“So, it is not reporting of individual transactions or anything of the like. And it would be a simple thing for banks and other payment providers to provide along with the other information they’re already providing.”
Under the proposal, banks would be required to turn over aggregate inflow and outflow numbers annually to the IRS and would cover bank accounts with at least $600 or at least $600 worth of transactions, according to The Wall Street Journal.
Treasury Secretary Janet Yellen (left) and Federal Reserve Chairman Jerome Powell (right) defend President Joe Biden’s plan to have banks inform the IRS of transactions that are $600 and over.Kevin Dietsch/Pool via AP
The proposal has been slammed by Republicans as an invasion of privacy. Last week, Wyoming Sen. Cynthia Lummis slammed the treasury secretary during a Senate Banking, Housing, and Urban Development