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 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.
And the IRS has a sketchy record of protecting people’s privacy, with ProPublica somehow getting sensitive financial information on certain wealthy individuals and exploiting that for their own gain.
Can the IRS Do That? Is It Even Legal?
There are also potential Constitutional problems with the rule as I see it. Being a future member of the bar, this aspect of it seriously concerns me. 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 posits 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. But 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.
Where this rule stands, in terms of its scope and invasiveness, is far beyond anything we have ever seen. This places the people at even further odds with our federal government and cements the idea that we are little more than tax cattle. I, for one, am not okay with that.
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 entirely 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 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.
Remember how the IRS targeted certain groups based on political and religious beliefs? I cannot imagine how this rule would not be used for similar purposes in the future.
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 that Caesar is placing us under increasing scrutiny to ensure that absolutely nothing gets past his watchful eye. The risks to our privacy don’t seem to matter much.
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 reduces our ability to give to God and 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 Congress, the Leviathan seems like it will not be satisfied until it has almost unlimited discretion over what it takes.
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 it. 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 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). In reality, it’s the wealthy who have the resources necessary to protect themselves.
It’s the little guy who will bear the brunt of this, the ones who do not have such resources at their disposal to fight the IRS. 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.
I am here to help people find financial freedom and build wealth. This is a fundamental attack on our privacy. I generally avoid political discussions here because they are often not very productive. But regardless of one’s persuasion, this ought to be very concerning to everyone.
Speak out Today
Call and write your Congressional delegation and tell them that this proposal is unacceptable. Say NO to such invasive spying on the most intimate parts of our lives.
Note: The article was originally published on The Financial Apologist, of which I am the General Editor. The content has been modified and republished with permission.
