Motion to Discharge

Floor Speech

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Mr. CRAPO. Mr. President, in the past few weeks, I have been working with my colleagues in the Senate to draw attention to the privacy concerns of requiring all financial institutions to report to the IRS on the inflows or outflows on every checking, loan, and investment account above a certain threshold.

Under the guise of closing the tax gap, Democrats have proposed to drastically expand the powers of the IRS and turn banks and credit unions into private investigators for law-abiding Americans. The proposal as it originally came out in the ``Green Book'' from the White House required that every single financial account--not just bank accounts, not just credit union accounts, but all financial accounts that have more than $600 worth of inflow or $600 worth of outflow in a given year would have to have that reported to the IRS.

We have been pointing this out to people across America now for several weeks, and the uproar is loud. The message has been getting heard obviously because now the administration and the IRS are saying: Well, we didn't really mean just everybody who has a $600 inflow or outflow of their account. We are willing to raise that to $10,000--so that you don't have to have the IRS snooping on your financial data in your financial accounts unless you have more than $10,000 worth of income or more than $10,000 worth of outflow in your account.

And they said: And we are not even going to count wages or interest or government benefits in that.

Well, let's see what that really means. Does that really reduce the scope of this spying on Americans' financial accounts, this dragnet, letting the IRS have access to everybody's account? How many people don't have $10,000 worth of income or outflow in their account?

Let me just give you a few data points. From the Bureau of Labor Statistics, the average household in America--the average taxpayer in America spends about $61,000 a year. What do they spend that on? The average is housing, $20,000; transportation, $9,700; personal insurance and pensions, $7,296; healthcare, $4,968; groceries, $4,464; restaurants and other meals, $3,459; entertainment, $3,226; other, $2,030; cash contributions, $1,888; apparel and services, $1,866; education, $1,407; and personal care, $768--for a grand total of the average American running $61,224 through their personal accounts in a year.

So does raising the total to $10,000 really stop the IRS from accessing very many people's accounts? No. The IRS today, because of the pressure that we have been putting on them, said today: Well, you know, we already have data from everybody's account on their paychecks; and we already have data on their interest that they get on their various accounts, which has to be reported to us; and we already have data on Federal benefits, like the COVID payments that have been made to people. So we don't need to have those data points collected in this new, massive privacy violation. We can leave those out. But we need-- and this is what the IRS said today, trying to defend this: But we need to have access to the other sources of income that people have.

Now, in that very same document, the IRS said: Well, we are not going to audit anybody who makes less than $400,000 a year. Well, that wasn't what the Green Book said. They didn't say we will change our proposal to forbid us from auditing anybody who makes less than $400,000 a year. All they said was: Take our word for it. We promise. We will only audit rich, rich people who are billionaires.

Well, if that is really the position they are taking, then why don't they put it in the bill? Why don't they put it in the proposal? Why don't they put right in the proposal that they cannot, secretly or publicly, access the data of private individuals in their private accounts if they make less than $400,000 per year? It would be really simple, wouldn't it?

But the IRS didn't say that, and the reason they didn't say that is because that is not what they intend to do. Remember, they started out at $600. That tells you what they wanted. Now, they said: Well, we think we can get away with $10,000--because they know that still covers everybody.

Think of a family that doesn't spend more than $10,000--yeah, that spends less than $10,000 in a year in their financial accounts. Think of a small business in America that doesn't run more than $10,000 a year of income and expense through their accounts. It will pick up every small business in America; it will pick up, I think, every family in America; and nothing will be changed. The IRS will have data on every American's account.

Then they say: Well, OK, but it is only two numbers. It is just the total of your income and the total of your outflow.

Well, everybody can kind of intuitively tell that that doesn't make sense. What would they do with those two numbers? What they will do with those two numbers is use their algorithms to figure out which taxpayers to audit--or which taxpayers that they don't even need to audit; they will just send them a notice of deficiency and say: Well, we think you should owe more taxes, and this is what we think you should owe us.

And if the taxpayers don't comply, then the IRS can go ahead and audit them. And guess what happens when they audit them? They get access to every single transaction in their account.

I asked the IRS Commissioner about whether this proposal involved transactional data or just totals, and he said: Well, we already have access to their transactional data if we want it. That is not a direct quote, but that is the essence of what he said. And it is true. If they want to audit you, they can get access to your bank accounts already.

So the question is: Who are they going to audit? Now, today, those who are trying to defend this say: Well, we are only going to audit people who have, as they said, $10,000 worth of inflow or outflow, and we will even exclude wages, which are already reported, and we will exclude government benefits, which are already reported, and we will exclude interest, which is already reported, and we won't look into anybody's account if they make under $400,000.

Well, that is actually not true. They just said they wouldn't audit those accounts. How can they make the money they are trying to make out of this proposal if they don't?

Let's look at this in another perspective. We asked the Joint Committee on Taxation to tell us what they think the distribution of audits and tax collections would be from Americans in all income brackets of this proposal, and the Joint Committee on Taxation said: Well, you know, we can't tell you that because they haven't given enough detail on their proposal. So we can't tell you what their proposal is going to do because they haven't told us just the details of how their proposal is going to work.

But Joint Committee on Taxation did say: You know, what we can do is look at the tax gap, which this is supposedly aimed at addressing, and we can tell you where that tax gap falls among the various income cohorts. So we asked them to do that.

They indicated that the tax gap falls mostly in ineffective or less than accurate reporting on schedules C and schedule E. So they went through and they looked at this. So if you look at the Joint Committee on Taxation's report and the tax gap that is available for the IRS to go get, here is what would happen: 40 to 57 percent of the tax gap collections would come from taxpayers making $50,000 or less. If you add in up to $100,000, 65 to 78 percent of those making less than $100,000 would be part of the tax gap that they would be going after; 78 to 90 percent from those making less than $200,000; and only 4 to 9 percent would come from those making $500,000 or more.

So if you want to know what the IRS wanted, you can look at this data on the tax gap; you can look at the data on where the tax gap lies; and you can look at their very first proposal that was down as low as $600. And you know then what the IRS is seeking to get.

Americans should be outraged that the IRS is seeking to make banks, credit unions--I don't know--Venmo, PayPal, credit card companies, everybody who handles financial transactions, report to them, if you hit some level, whether it be $600 or $10,000 of either income or expenditure. And then the door is open. Then the IRS can use its algorithms and decide whether to do a deeper dive on you.

And if they use the data from the Internal Revenue Code and from the tax reporting that has already gone on, 90 percent or more will come from people making $200,000 or less. Or the IRS will have to forgo that; in which case, they will be trying to collect on only 4 to 9 percent, which is the people making over $500,000.

Either way you look at it, either they are going to be collecting money--and that is billions and billions of dollars--from people who make less than $400,000 and mostly less than $200,000 or $100,000--or they won't make the tax collections that they are claiming they are going to get to justify the spending they want to make in their spending spree, in this big tax-and-spending spree that they are trying to cram down through Congress.

Let's look at it from another way. Does Treasury envision gathering information on all of a--let's take a teacher. So if you have a teacher, does Treasury envision gathering information on all of the teacher's savings, checking, PayPal, Apple Pay, and Venmo accounts and somehow expect financial institutions to crosscheck these transfers to see if the threshold has been tripped? And at which point must additional reporting be done?

It is very important to point out here: When I said earlier the White House and Treasury haven't really said what their plan is, it is because they don't want people to know what the real plan is.

There is a telling sentence in the Green Book, put out by the White House, about this plan. It says that broad powers will be given to Treasury Department to issue by rule and regulation the details of how they are going to utilize and access this data.

So if you have got a Treasury Department which has already proven it can't keep the data it has safe and that its data will be hacked; if you have a Treasury Department that has already proven that it will not avoid utilizing the data it has for political purposes, that it will not weaponize the data it collects to punish or try to diminish the effect and influence of people with different political points of view; if you already have an IRS that has proven that it will take those kinds of actions, and that it is available to be accessed for its private data to be hacked, what can Americans expect from that?

Again, those today who have talked about it said they have fixes that, as I see it, don't really fix the proposal because it has fundamental flaws. The IRS does not need to have access to the accounts of every American who spends more than $10,000 or every American who has income of over $10,000.

Industry has already spoken up about these changes that were proposed today. The American Bankers Association says that even with the modifications announced today, this proposal goes too far by forcing financial institutions to share with the IRS private financial data from millions of customers not suspected of cheating on their taxes.

The exclusion of payroll and Federal program beneficiaries does not address millions of other taxpayers who will be impacted by this proposal. Not every nonwage worker is a millionaire. How about self- employed hair stylists, convenience store owners, and farmers, just to name a few?

If enacted, this new proposal would still raise some of the same privacy concerns; increase tax preparation costs for individuals and small businesses; and create significant operational challenges, particularly for community banks. The list goes on.

Americans must speak up loudly and say ``no.''

When asked if she was going to put this in the next bill, Nancy Pelosi said: ``Yes, yes, yes, yes.''

Americans should say ``No, no, no, no.''

I yield to Senator Grassley.

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Mr. CRAPO. Mr. President, that concludes the Finance Committee Members' discussion today.

I just want to thank Senator Grassley and Senator Young for joining me to help to continue to make the American people aware of what is going on here in Washington with this reckless tax-and-spending spree and this massive dragnet of IRS access into people's individual bank accounts and other financial accounts.

I hope Americans across the country will speak out loudly in opposition to these terrible ideas that are now being crammed down in both the House and the Senate.

I yield back our time.

I believe Senator Grassley is here to speak on other matters.

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