Janet Yellen Denies IRS Monitoring $600 Transactions Is Spying on Americans

Treasury Secretary Janet Yelland has said a proposal allowing the IRS to monitor bank transactions over $600 would tackle tax fraud among the super-wealthy and was not aimed at spying on ordinary Americans.

The Biden administration's proposal would see banks turn over aggregate inflow and outflow numbers annually to the IRS for bank accounts with at least $600 or at least $600 worth of transactions, according to the Wall Street Journal.

The IRS has said that the plan would raise over $460 billion in tax revenue over the next decade, but some Republicans have called it an invasion of privacy.

In September, Sen. Cynthia Lummis (R-WY) challenged Yellen during a Senate Banking, Housing, and Urban Development Committee hearing, asking her: "Do you distrust the American people so much that you need to know when they bought a couch? Or a cow?"

Lummis also said that such a move would be a "dramatic new regulatory burden for community banks and credit unions in Wyoming and elsewhere."

In August, Lummis co-sponsored an amendment by Sen. Mike Crapo (R-ID) to the Democrat's $3.5 trillion spending proposal, which aims to prevent financial institutions from monitoring and reporting taxpayer information to the IRS.

But Yellen defended the proposal on CBS News when asked by anchor Norah O'Donnell if the proposal meant that "the government is trying to peek into our pocketbooks?"

"Absolutely not," Yellen said on Tuesday, "I think this proposal has been seriously mischaracterized."

She said the proposal "involved no reporting of individual transactions of any individual."

"We have a tax gap that over the next decade is estimated at $7 trillion," Yellen said, "namely, a shortfall in the amount that the IRS is collecting due to a failure of individuals to report the income that they have earned."

When O'Donnell countered by saying that applied to "billionaires" and should ordinary Americans face such scrutiny, Yellen replied: "It tends to be among high-income individuals whose income is opaque."

"If you earn a paycheck, you get a W2, the IRS knows about it," Yelland said, adding that among "high-income individuals with opaque sources of income that are not reported to the IRS," there was "a lot of tax fraud" going on.

"All that's involved in this proposal is a few aggregate numbers about bank accounts," she said, "the amount that was received in the course of the year, the amount that went out in the course of a year."

This would allow the IRS to be flagged to audit someone with an income of $10,000 suddenly having "$3 million go out of their checking account."

Banks and their trade groups also oppose the idea, saying it would give the IRS excessive control over an individual's finances. Some lawmakers have proposed raising the threshold from $600 to $10,000.

Newsweek has contacted the Treasury Department for comment.