Provision Aimed to Crack Down on Tax Dodgers Removed From Biden Spending Package

The revised version of President Joe Biden's trillion-dollar social safety net package no longer includes a provision that would have required banks to submit additional information to the IRS regarding customer transactions.

The proposed rule was originally intended to bolster the IRS' ability to identify people who underreported income on their taxes. The measure was "vigorously opposed" by banks and credit unions, which can now consider its elimination a "major victory," said Reuters.

Democrats proposed the rule, hoping it would draw greater tax revenue to fund the package's previous $3.5 trillion price tag. Banks would have needed to report to IRS any account that had $600 worth of funds each year.

"The last thing Americans want right now is the government snooping on their accounts," Jim Nussle, head of the Credit Union National Association, told Reuters. "Safeguarding consumer privacy and data security is a key part of promoting financial well-being for all, and it's encouraging that Congress recognizes this credit union priority."

Treasury Secretary Janet Yellen said the information gathered from the rule would have made it easier for tax collectors to identify accounts exhibiting higher activity than indicated by their taxes. Yellen believes this would have raised a significant sum of revenue to finance the budget proposal.

Democrats attempted to save the measure by raising the reporting threshold to $10,000. Nonetheless, the industry voiced strong opposition to the proposal and moderate Democrats ultimately pushed it out of the current version of the package.

The Biden plan now stands at a cost of $1.75 trillion and continues to stand as the subject of division amongst the moderate and progressive wings of the Democratic party.

To bring down the cost and secure the votes of Senators Joe Manchin and Kyrsten Sinema, the bill did away with the proposed prescription drug pricing reform, a Medicare expansion that would have added vision and dental, and some investments in green energy. The bill also did away with certain taxes that would have been levied on the wealthy and scrapped paid family leave.

"We have a framework that will get 50 votes in the United States Senate," Biden said during a private meeting at the Capitol, according to The New York Times. "I don't think it's hyperbole to say that the House and Senate majorities and my presidency will be determined by what happens in the next week."