Missouri Treasurer Scott Fitzpatrick has said he will not comply with a controversial financial reporting plan that is making its way to Congress.
The proposal, which is part of the $ 3.5 trillion U.S. Family Plan being negotiated in Congress, would create a comprehensive reporting system in which banks and other financial institutions would be required to disclose account information that collect or spend more than $ 600 per year for the Internal Revenue Service.
The requirement is estimated to apply to more than 100 million Americans with bank accounts and is intended to help end tax evasion.
Fitzpatrick said the requirement would weigh on financial institutions, endanger sensitive account information and violate the privacy of Americans.
“People have reasonable expectations of privacy, and it’s basically an unwarranted search and seizure of information that, in any other situation, you should have a warrant to access,” Fitzpatrick said. . “We view the proposal as constitutionally problematic, and we also review our state law responsibility to protect account holder information. So as a result of that I determined that frankly we are not going to comply with this requirement if it is enacted and if they try to force us to comply we will fight in court.
Fitzpatrick said he also doesn’t believe the IRS is ready to use the data in any meaningful way or protect it well.
“There has been information leaks about IRS taxpayers even this year, so giving them access to every American’s banking information seems like a terrible idea,” he said.
Fitzpatrick said the measure would also make it harder to promote financial literacy and encourage Missourians without a bank account to use one.
In addition to being an invasion of privacy and security, Fitzpatrick said this requirement conflicts with Missouri law as it applies to state MOST 529 and MO ABLE accounts overseen by the office. of the treasurer.
MOST is the Missouri 529 Education Plan, which is an investment account Missourians can use to save for their education. MO ABLE is the state savings and investment program for people with disabilities. Together, they represent nearly 200,000 savings and investment accounts and over $ 4 billion in assets.
MOST and MO ABLE accounts are currently kept confidential by state law.
Fitzpatrick said the proposal, as currently drafted, would require his office to hand over all transaction data related to MOST and MO ABLE accounts, including deposit and withdrawal information.
Last month, Fitzpatrick joined 23 other state treasurers, auditors and financial officers at the State Financial Officers Foundation in sending a letter to President Joe Biden indicating their opposition to the proposal.
The letter contained much of the same reasoning for which Fitzpatrick, who is vice president of the State Financial Officers Foundation, opposes the measure.
“Simply put, this is a direct attack on all Americans of all economic demographics and includes all business and personal accounts,” the letter said. “There is no quantitative or qualitative evidence that this proposed measure will help collect taxes from tax evaders.”
Fitzpatrick has said he expects other opposition states to also fail to comply with the federal requirement if it is enacted and jointly fight the court challenge.