Tax Update Blog

House Speaker backs including increased bank reporting in reconciliation bill

October 12, 2021 | Blog
By Jay Heflin

House Speaker Nancy Pelosi (D-Calif.) said on October 12th that she supports requiring banks to report to the IRS transactions over $600 to curb tax evasion, and that the provision should be included in the budget reconciliation that is currently stalled in Congress.

“If people are breaking the law and not paying taxes, one way to track them is through the banking measure. I think $600, but that is a negotiation that will go on as to what the amount is,” she said.

President Joe Biden included in his budget proposal a requirement that banks report to the IRS transactions over $600.

“This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600,” according to the Treasury Department.

The proposal could raise as much as $460 billion over the next decade, according to Treasury.

The reporting requirement was excluded from legislation that the House Ways and Means Committee approved in September. But the committee’s chairman, Rep. Richard Neal (D-Mass.), reportedly said that the requirement could become part of the budget reconciliation bill. 

That Neal-backed measure could require banks to report to the IRS on transactions at or above $10,000. The modification is expected to raise less revenue for the federal government, between $200 and $250 billion over a ten-year period.

Where reconciliation negotiations stand:

Democrats in Congress and President Biden appear to agree that the $3.5 trillion bill will be reduced to possibly $2 trillion. Talks continue on this issue between Democratic lawmakers and White House officials as they try to reach an agreement on a top line number for the legislation.

After the top line number is agreed upon, Democrats will then discuss what provisions should be included in the legislation.

White House Press Secretary Jen Psaki told reporters on October 12th that talks between Democrats are ongoing, which have continued for weeks, but lawmakers have begun to understand that decisions must be made soon on what the bill should cost and what should be included in it.  

“We’re having important discussions about what a package that is smaller than $3.5 trillion will look like… We are at a point…where there are choices that need to be made,” she said.

Psaki also suggested that a lower priced bill would require fewer tax increases.

“Because the package will not be $3.5 trillion, it will be smaller as everyone has acknowledged, you won’t need the same number of payfors [tax increases],” she said, adding that it is not clear which tax increases could be left on the cutting-room floor due to a lower-priced bill.

“In terms of what those [tax increases] look like, there are a range of proposals that the president has conveyed he supports,” Psaki said.

However, Democratic lawmakers will be the ultimate decision-makers on this subject.  And some progressive Democrats contend that tax increases should exceed the total bill’s cost, meaning that the legislation would raise revenue.

It is unclear when a final product will be released. Democratic leaders in Congress would like to complete the bill by Halloween. Others contend that timeline is too ambitious and think negotiations could continue into December before a finalized bill is released.

Stay informed!

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