by Bob Barr
Always lurking inside gargantuan pieces of legislation like the $3.5 trillion spending bill President Biden wants congressional Democrats to send to him, are dangers far worse than the dollar price tag. Such bills invariably include measures that give to government powers it neither deserves nor to which it is entitled, and which wind up costing citizens dearly in loss of privacy and other freedoms.
Currently, it is the IRS salivating at the thought of gaining even greater power than it already enjoys to snoop into taxpayers’ private financial records. If in fact the tax agency gets what Biden wants to give it, the IRS will have before it any individual’s financial accounts with gross inflows and outflows of more than $600 (that’s just six hundred dollars, not six thousand).
The federal government’s power to monitor financial transactions is already vast, but apparently not enough for the folks at the IRS.
Thanks to Uncle Sam’s half-century old War on Drugs, and its junior partner, the 20-year-old War on Terror, the Treasury Department, of which IRS is a part, has the power already to monitor virtually all cash transactions of $10,000 or more. Moreover, if an individual tries to evade such reporting requirements by breaking the total amount into smaller packages, that is itself a federal felony (called “structuring”).
Figuring out whether a taxpayer has crossed the line from lawful financial activities to illegal financial transactions like “structuring,” however, has been difficult for the IRS.
Americans for Tax Reform, a non-partisan, Washington, D.C.-based non-profit discovered that only eight percent of the IRS Criminal Investigation Division’s investigations into allegations of structuring uncovered actual violations of federal tax law. ATR’s research also revealed that this pitiful rate of return on investigative resources was because investigators simply “had not considered reasonable explanations” for the activities by those it targeted, leading the watchdog group to conclude that most investigations were “merely IRS-CI fishing expeditions.”
These financial transaction laws and accompanying regulations easily can become snares for the unwary, and there are numerous reported cases in which individuals and small business owners have found themselves on the wrong end of a federal felony prosecution for failing to be fully aware of the complexities of the laws.
One of the simplest ways for Uncle Sam to snoop on citizens’ banking transactions is the notorious “Suspicious Activity Report” (SAR). The Bank Secrecy Act mandates that employees at banks, credit unions, and even car financing companies, file such a report with the federal government for any transaction by one of its customers, if it appears “unusual” or out of the ordinary. The SAR is to be filed in every such instance, even if there is no evidence the transaction is illegal; only that it “might signal criminal activity” to the teller or other bank employee.
Biden now reportedly wants to make it even easier for the IRS to monitor individuals’ financial dealings by requiring financial institutions report any accounts where transactions over the year total more than a paltry $600, without further justification.
That many Democrats in Congress appear ready to grant such power to the IRS tells us how far the Party has diverged from its roots of protecting individuals from abusive government snooping. Republicans who would acquiesce to this provision will be confirming they remain blind to individual privacy in the face of government claims to be “making us safer.”
This move expanding the power of the IRS to gain access at will to virtually every bank account in America, may be justified by Biden and Democrats as necessary to access monies hidden in accounts the government wants to seize, and by so doing, help pay for the multi-trillion-dollar spending bill. This is an argument that cannot honestly be made with a straight face, but also one that rarely causes Democrats to hesitate spending the money anyway.
A more accurate, if unspoken reason some Democrats would support expanding the snooping powers of the IRS, is that it would facilitate uncovering details about financial accounts held by political enemies.
Intense pushback from Republicans may be enough to keep this proposal from the final markup of the budget as it goes through the reconciliation process; however, if this IRS-backed provision actually makes it to Biden’s desk, where he surely would sign it, one of the very last vestiges of financial privacy heretofore enjoyed by Americans, will have been swept aside by the stroke of a president’s pen.
Bob Barr represented Georgia’s Seventh District in the U.S. House of Representatives from 1995 to 2003. He served as the United States Attorney in Atlanta from 1986 to 1990 and was an official with the CIA in the 1970s. He now practices law in Atlanta, Georgia and serves as head of Liberty Guard.