As the State Auditor and State Treasurer of Mississippi, it’s our obligation to make sure your money is protected and Mississippi small businesses can thrive. For this reason, we are firmly opposed to the Biden administration’s proposal to increase surveillance of financial institutions and your bank account.
This summer, the Biden administration announced a plan to require financial institutions, like community banks and even Venmo, to disclose private, law-abiding citizens’ personal transaction history to the Internal Revenue Service (IRS) if the account exceeded $600 of aggregate financial activity. After strong bipartisan objection to that plan, Congress ultimately rescinded the proposal. Even so, House Democrats inserted new provisions to dramatically expand the IRS, potentially preparing for increased monitoring going forward.
We remain committed to aggressively defending Mississippians from IRS monitoring plans like this for a variety of reasons. First, a proposal like this would cause people to leave the banking system. This means fraudsters and white-collar criminals will move further underground and become even harder to detect. The State Auditor’s office relies on close partnerships with banks to track and uncover criminal activity involving taxpayer dollars, so some investigations could become almost impossible if the Biden administration plan becomes reality.
Further, enhanced monitoring of law-abiding bank accounts would hurt small businesses already struggling to recover from the pandemic and the policies that discouraged work. Specifically, the IRS would be more likely to double-count small business income, unintentionally increasing the tax burden local job creators bear.
Businesses’ access to loans could also be affected, as the regulatory costs of this proposal will likely put some smaller banks (those responsible for about half of all small business loans) out of business. This could, in turn, worsen our state’s “brain drain,” a significant concern for us as we are the two youngest statewide elected officials in Mississippi. This is because local banks and small businesses are where many talented young people seek to work if they want to stay in their local communities. We cannot afford another hit on small communities in the heartland of America.
Finally, the proposal creates a cybersecurity risk. Today, the IRS experiences 1.4 billion cyber attacks annually. Increasing the amount of sensitive information that passes through the IRS will only exacerbate these risks. What’s more, the IRS has enacted no additional guardrails preventing the hacking of this information.
We know how this will play out for Mississippi. Over the last 18 months, Mississippi has witnessed large-scale unemployment fraud. In many cases, fraudsters exploited stolen consumer information to commit identity theft. If the IRS collects and centralizes your detailed financial account information, the federal government will have created an irresistible target for cyberattacks. That means the federal government would put over 90% of Mississippians at risk of having their identity stolen. Such a proposal must never move forward.
Simply put, if enacted, an IRS monitoring proposal – such as the one the Biden administration offered - would create one of the largest and most continuous data-mining exercises in American history, placing a strain on privacy, data security, and small businesses. It comes at a price too high for the honest, hardworking Mississippians who already follow the law and pay their taxes.
It’s ultimately the duty of our offices to ensure taxpayer dollars are protected and small businesses can grow. Giving the IRS the power to monitor nearly every Mississippians’ bank accounts will make those jobs harder.
Shad White is the 42nd State Auditor of Mississippi. David McRae is the 55th State Treasurer of Mississippi.