Letter to Hon. Nancy Pelosi, Speaker of the House, and Hon. Richard Neal, Chairman of the House Ways and Means Committee - Pappas Joins Letter Urging IRS Reporting Rules Be Removed From Build Back Better Proposal

Letter

Dear Madam Speaker and Mister Chairman:

We write today to express our concern about the new tax information reporting regime proposed
by the Department of Treasury under consideration for inclusion in the reconciliation package.
This proposal would require information on the gross annual inflows and outflows of all types of
financial accounts in the United States (e.g., savings accounts, checking accounts, loans,
investments) to be submitted to the Internal Revenue Service (IRS) annually. We respectfully
request that this proposal be withdrawn from further consideration in favor of a more targeted
approach.

While the intent of this proposal is to ensure all taxpayers meet their obligations--a goal we
strongly share--the data that would be turned over to the IRS is overly broad and raises
significant privacy concerns. We have little information about how the IRS plans to protect or
use this massive trove of data. Americans expect their bank or credit union to safeguard their
financial information. This proposal would erode trust in financial services providers.

Over the past few weeks, hundreds of thousands of constituents have reached out to our offices
voicing concerns and opposition to allowing the IRS to collect this data. We have also heard
from a wide range of constituent companies and small businesses about the significant burden
and potential unintended consequences that could result from the new reporting regime.

Indeed, presumably based on this significant feedback, Treasury and other policy makers have
proposed changes to the proposal, including increasing the de minimis level for reporting to
$10,000 and providing for certain exclusions for payroll and federal program beneficiaries. We
continue to hear from constituents that while these modifications somewhat decrease the level of
reporting, a significant number of taxpayers will continue to meet the reporting criteria. Most of
these taxpayers are not the wealthy tax evaders who are the stated targets of this proposal.

A change of this magnitude deserves careful consideration by Congress and impacted
stakeholders. The Department of Treasury first included this idea in the Green Book, which was
released in May 2021, and we have yet to see legislative language outlining the specific contours
of this policy. Given the privacy concerns this raises in addition to the significant burden that
would be imposed on a broad range of businesses and financial institutions, we respectfully
request that this proposal not be included in the Build Back Better package.

Sincerely,