Financial institutions are recruiting their customers to help stop a measure under consideration in Congress that would require banks to hand over some account information to the IRS.

The effort, including shareable social media posts, direct emails from customers and pressure from Republicans, may be working.

Democrats, who are contemplating adding a new bank reporting provision to the multi-trillion-dollar tax and spending proposal, are already planning ways to scale back the original idea from President Joe Biden’s Treasury Department as a way to increase tax compliance. Advocates say the measure is necessary to help the IRS target high-income taxpayers who are shielding income from tax collectors.

Banks, credit unions and other financial companies that would be required to report bank account inflows and outflows to the IRS under the plan say the idea is an overreach of the IRS and would affect a wide swath of taxpayers. Several small banks and credit unions have been urging their customers to contact their members of Congress to oppose the idea.

“While we typically do not raise issues occurring in Washington with our customers, Congress is considering requiring financial institutions to report detailed information on customer bank accounts to the IRS,” Wisconsin-based First Citizens State Bank said in a Facebook post.

“We work for our customers and our community, not the IRS. Join us in telling Congress that proposed IRS bank account profiling is intrusive and indiscriminate for our customers,” FNB Community Bank, an Oklahoma-based bank, said in a Facebook post that was shared on Facebook more than 74,000 times.


CommunityAmerica, a Kansas-based credit union, sent an email message to their account holders urging them to tell Congress that they oppose the provision.

Paul Merski, a group executive vice president at the Independent Community Bankers of America, said his group has prompted people to send more than 400,000 messages to members of Congress.

“They are voicing real concerns about how the proposal would jeopardize the privacy and security of their financial information, particularly when the IRS has a troubling track record of protecting customer data,” Blair Bernstein, a spokeswoman for the American Bankers Association, another bank trade group, said. “The conversation started in bank branches and on social media, and now consumers are letting their lawmakers know that they oppose this idea.”

The Treasury Department proposal would require the IRS to report inflows and outflows from accounts with at least $600 of deposits or withdrawals. Democratic leaders in Congress have agreed that threshold should be increased to $10,000 and are looking at additional exceptions, such as excluding payroll deposits or mortgage payments, to narrow the scope of accounts that would be reported to the IRS.

Treasury Secretary Janet Yellen told the Senate Banking Committee Tuesday that this new reporting requirement is in line with data transfers that are already part of the tax system. She said this proposal would add two additional lines to an already existing tax form that banks use to report interest income on accounts.

“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 at the hearing. “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.”


House Ways and Means Chairman Chairman Richard Neal and Senate Finance Committee Chairman Ron Wyden have both said the goal is to target high-income taxpayers who have the ability to shield small business profits, rental income or other revenue that isn’t automatically reported to the IRS, like wage data already is.

The Treasury Department estimates that taxpayers are 99% compliant when there is third-party data confirming income, but that figure falls to 45% when there isn’t any verification.

“To the extent that people think that the government should not have access to financial data, that ship has already sailed,” said Marc Goldwein, a senior vice president at the Committee for a Responsible Federal Budget. “We already report all sorts of the information to the IRS. This is not giving the FBI every one of your transactions so that they can scrutinize it.”

Democrats are sensitive to a barrage criticism from Republicans and negative perceptions from middle-income taxpayers that their accounts could be targeted. Neal said he is advocating in closed-door meeting to make sure this doesn’t affect people at the lower-end of the income spectrum.

“I can assure you, privately, I made a very vigorous case about this,” Neal said.

Democrats omitted the bank reporting idea in a version of the legislation that passed the Ways and Means Committee earlier this month after lawmakers were nervous that the Treasury Department’s $600 threshold proposal was too broad and unpopular with voters. A revised version could still be added as the House and Senate continue to negotiate the legislation.

Rep. Lloyd Doggett, a senior Democrat on the House Ways and Means Committee, said he understands concerns that the reporting requirements should not target every account and should be tailored to focus on high-income taxpayers. Still, he said he’s worried that banks have outmaneuvered Democrats in their messaging, drawing parallels from when Republicans created large opposition to the estate tax by branding it the death tax.

“I think the idea of trying to have a more targeted bank reporting provision to discourage tax evasion is a reasonable thing,” Doggett said. “I don’t know if it will be in there because the opponents have done a good job of treating it like the death tax.”