In an interview with CBS, Yellen addressed a misconception that the requirement would be reporting all transactions over $600. It would instead instruct banks to report full-year inflow and outflow information from bank accounts with more than $600 in total activity – in what Yellen called an effort to target rich tax cheats.
"I think this proposal has been seriously mischaracterized. The proposal involves no reporting of individual transactions of any individual," Yellen told CBS. "We have a tax gap that over the next decade is estimated at $7 trillion, 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."
"It tends to be among high-income individuals whose income is opaque," Yellen continued. "All that's involved in this proposal is a few aggregate numbers about bank accounts."
True, the proposal would not report single transactions of $600, but that means the requirement would still affect nearly every single bank account in the United States that is used to receive paychecks, pay rent or buy groceries over the course of a year – even if that account does not have an individual transaction of more than $600.
Jessica Anderson, the president of the conservative Heritage Foundation, criticized Yellen's comments as missing the point that nearly every American would still be affected by the reporting requirement.
"It’s unfortunate that Treasury Secretary Janet Yellen claims this new IRS proposal would only be implemented to stop billionaire tax dodgers," Anderson told FOX Business. "In reality, any American with over $600 in their bank account or $600 in annual transactions would be left vulnerable to being snooped on by the IRS."
"After years of politically motivated leaks and hacks, why should we trust the IRS not to snoop on Americans or silence political opponents?" she questioned. "The truth is, the Biden administration is weaponizing the IRS against anyone who uses the American financial system, and now the Secretary of the Treasury is coming out in support of this radical proposal."
Sen. Cynthia Lummis, R-Wyo., also noted that the requirement – which is included in Democrats' massive budget reconciliation bill – would give data from the vast majority of Americans to the IRS.
"No amount of explaining will change the fact that this $600 reporting threshold is completely unacceptable, a massive government overreach, and gives the IRS data they can’t manage properly," Lummis said.
"Secretary Yellen is essentially implying the American people are regularly committing tax fraud," she also said. "Throwing out ‘innocent until proven guilty,’ this rule would facilitate unwarranted snooping by the IRS."