President Biden has proposed to congress that they add language to the reconciliation bill which would require all financial institutions to provide the Internal Revenue Service a list of transactions for all customers whose transactions total at least $600 per year. Considering that most employed Americans deposit at least one paycheck or receive at least one direct deposit of greater than $600, it is safe to assume that banks will be asked to report financial transactions for all citizens without those customers’ consent.
The stated purpose of this verbiage is to assist the Federal government by improving tax collection and tax compliance. We at Farmers and Mechanics would encourage every citizen to honestly file and faithfully comply with the laws of our great nation. However, we are concerned that requiring financial institutions to provide the data necessary to fulfill the government’s stated purpose will have unintended consequences which will be significant and harmful to consumers.
We are primarily concerned with the safety of this data trove. The hundreds of millions of records that will be transmitted to the IRS will significantly increase their data security burden. Based on recent IRS data breaches in 2015 and 2021 we are concerned with their ability to handle any additional security burdens.
There are several other reasons this proposal is concerning. We believe this will have the unintended consequence of driving otherwise law-abiding citizens out of the financial system. The costs to the financial system, much of which will be passed on to consumers in the form of lower interest rates and higher borrowing costs, will be significant. Beyond the safety and security of the data when it arrives to the IRS, we are also concerned with the security of the data transmission.
For all these reasons, we cannot support this proposal and would encourage you not to support it either.
We prioritize your data security, and we will ensure, to the best of our ability, that it remains private.
We would encourage you to reach out to members of Congress and respectfully ask them not to include this language in the upcoming bill.
Joshua Riggins is the president of Farmers & Mechanics Federal Bank in Bloomfield, and is committed to providing customers with a reliable and competent banking experience.