Do you consider the IRS your friend? Do you think they’re looking out for your best interests, always there to lend a helping hand during hard times? I didn’t think so. And we don’t think so either. Their newest rule proposal further cements why the collective approval of the IRS is little better than that of Voldemort.
The Department of the Treasury is proposing new regulations that would cover just about every single person in the country in a dragnet financial surveillance system. Currently, the IRS requires reporting of transactions over a certain amount, purportedly to combat financial fraud and white-collar crime. That amount is currently at $10,000.
But the new proposal would put that amount at a paltry $600 per transaction, or the fair market value of the account.
In short, that effectively means constant surveillance of every adult’s bank account. What a horrifying thought.
Why is the IRS Proposing this Rule?
The justification by the Treasury Department is to crack down on tax evasion. Estimates are that the federal government would be able to take in an additional $460 billion. But these revenue-related motivations will likely come with severe collateral consequences for consumers.
The Independent Community of Bankers of America conducted a survey and found that two-thirds of respondents oppose the proposal.
“A bipartisan supermajority of Americans clearly opposes Washington’s plan for the IRS to monitor their bank account information, which Congress is now quickly advancing through a budget reconciliation package that requires only a simple majority to pass,” ICBA President and CEO Rebeca Romero Rainey said in a statement.
Rob Nichols, President and CEO of the American Bankers Association, stated that the ABA strongly opposes the measure.
“ABA and its members firmly believe that Americans should honor their tax obligations, but it is far from clear that requiring banks to report on every single customer financial account with gross inflows and outflows above $600 — creating a mountain of new data — will lead to better tax compliance,” he wrote in a September 7 letter.
What Will the Consequences Be?
First, banks will have astronomical compliance costs. This means more support staff, therefore higher payrolls, and likely higher fees for account holders. When access to banking becomes more expensive, it puts the path to wealth further out of reach for those of lower socioeconomic status.
Second, there are astounding privacy implications as well. In an age where more aspects of our lives are going digital, it’s important that we take appropriate steps to secure our data (against identity theft, for one). This represents a massive invasion of our privacy by an agency that is not our friend.
Third, there are also potential Constitutional problems with the rule. The Fourth Amendment states that the people shall be secure in their persons, houses, papers, and effects, and that warrants shall not be issued but under oath or affirmation, and that any warrants must describe the place to be searched, and the persons or things to be seized.
Now there is also the Third Party Doctrine, which purports that there is no expectation of privacy when one gives information to third parties. This was established in the 1979 decision of Smith v. Maryland. However, the Supreme Court took a chunk out of this doctrine in the 2018 decision of Carpenter v. United States, holding that there is an expectation of privacy in cell phone records.
The proposed rule would give the IRS tremendous search powers, even considering the Third Party Doctrine. Law enforcement agencies may be able to request certain information during the course of investigations. But having banking rules that require private institutions to hand over so much of their customers’ records is something else.
“What’s the Big Deal?
Some may say, “I have nothing to hide, so what’s the big issue?” If only it were so simple. To those saying such, would they be okay with a rule prohibiting curtains in all houses? Should our passwords be easy enough to guess?
Of course not. And the fact that it is the government at issue and not some obscure cybercriminal is merely a distinction without a difference. The IRS is not composed of neutral agents who always separate their own cognitive biases and agendas. These are human beings just like you and me who bring their own personalities and motivations to the job.
Rendering to Caesar?
Jesus commands us to render to Caesar what is Caesar’s. And we are also to render to God what is God’s. It seems to me that Caesar is trying to place us under increasing scrutiny, and ensure that absolutely nothing goes unreported, no matter the consequences to financial privacy.
Taxation is something that has almost always existed and will always exist in this realm. But when the State chooses to take significant portions of our earnings, it subsequently reduces our ability to give back to God and to our neighbor.
There’s a reason why Americans are the most generous people on the planet. Many other nations, especially in Europe, impose heavy levels of income taxation on their populations. They have less to give, and over time, I believe that has worn down the spirit of generosity.
This is another reason to be concerned long-term. It’s not merely about what the tax rates are today. Considering the plans currently working through the legislature, the Leviathan seems like it will not be satisfied until it has almost unlimited discretion over what it takes from us.
What Can We Do?
The best thing to do right now is to contact your Congressional representatives and tell them to vote No on the proposal. Tell your friends and family about the proposal, and ask them if they feel comfortable with the IRS being so intrusive.
Personal finance is personal, and there are many things that our transaction history reveals about us. That information can include things like what medications we are on (and therefore, what medical conditions we have), what romantic interests we may have, to whom we donate money, to whom we owe money… and on and on and on…
These types of measures will not have the effects that the politicians think they will. They may say it will ensure the rich “pay their fair share” (which they do already, by the way). But in reality, it’s the wealthy who have the resources to pay for lawyers and accountants to stay in compliance or to avoid targeting altogether.
It’s the little guy who will bear the brunt of it, the ones who do not have such resources at their disposal to fight an entity that is almost all-powerful. They will feel the increased costs of banking more harshly. They will feel more of the IRS’s scrutiny. And they will be the ones whose lives suffer the most intrusion.
Speak out today. Call and write your Congressional delegation and tell them that this proposal is unacceptable. Say NO to such Orwellian IRS surveillance of our private lives.