Democrats to scale back Treasury’s IRS bank reporting plan amid GOP uproar

Senate Democrats on Tuesday will unveil a scaled-back version of a Biden administration proposal to crack down on wealthy tax cheats after conservative groups and the bank industry raised major privacy concerns, three people with knowledge of the coming announcement said.

Initially, the Department of Treasury and Senate Democrats had proposed requiring financial institutions to provide the Internal Revenue Service with additional information on bank accounts with more than $600 in annual deposits or withdrawals.

After a backlash, the new proposal will instead require the provision of additional information for accounts with more than $10,000 in annual deposits or withdrawals, a measure Democrats have been considering for weeks but have not formally endorsed, the people said.

The revised version of the bank reporting proposal will also weaken its scope by exempting all wage income from counting toward the $10,000 threshold withdrawal, intending to ensure it applies to only larger account holders, the people said. The Biden administration has signed off on the changes and is expected to support the new plan, a potentially key source of new revenue to pay for Democrats’ multi-trillion-dollar economic package. The people spoke on the condition of anonymity to discuss a matter not yet made public.