Yellen presses Democrats on tax enforcement
Treasury Secretary Janet Yellen is pushing House Democrats to do more to stop tax cheats.
In a letter to House Ways and Means Committee Chairman Richard Neal (D-Mass.), Yellen pressed that Democrats as part of the tax proposals in the $3.5 trillion budget reconciliation package increase the amount of information that third parties report to the IRS.
Yellen said it’s important that this reporting be done in a broad way. She also said that the reporting would not be used to target the middle class.
“As you consider specific policy choices in designing an information reporting regime, it is important to ensure that the reporting regime is sufficiently comprehensive, so that tax evaders are not able to structure financial accounts to avoid it,” she wrote.
“But to be clear: a reporting regime that is broad-based will better assist the IRS in targeting enforcement priorities on the high-end who accrue income in opaque ways. Any suggestion that instead this reporting regime will be used to target enforcement efforts on ordinary Americans is wholly misguided,” she added.
Neal during Wednesday’s Ways and Means Committee markup of legislation for the package said he’s been having discussions with the Biden administration over proposals to increase the amount of information third parties report to the IRS.
“We’re in conversations with the administration on reporting proposals that target sophisticated tax avoidance and evasion without impacting middle-class and working Americans,” Neal said.
The administration has proposed providing the IRS with an additional $80 billion over 10 years so the agency can strengthen enforcement against high-income individuals and corporations.
The Ways and Means Committee’s legislation includes President Biden’s proposal on IRS funding but does not include a proposal from the administration to require financial institutions to report more information to the agency about bank account activity.
Neal said he also received letters from IRS Commissioner Charles Rettig advocating for the administration’s IRS funding and third-party reporting proposals.