House passes Build Back Better package without reporting proposal

The House of Representatives recently passed the Build Back Better legislative package without President Joe Biden’s initial plan to require financial institutions to report information on gross inflows and outflows for all accounts over $10,000 to the IRS and other controversial proposals. 

The House narrowly passed its version of the Build Back Better reconciliation package without numerous other provisions opposed by some in the banking industry, including hikes in corporate and capital gains tax rates, limits to the 199A deduction for sub-S banks, instituting capital gains taxes at death, reductions to the estate tax deduction, curbs to Section 1031 transfers widely used in rural areas, and restrictions on IRA investments.

“ICBA and the nation’s community banks applaud the exclusion of the widely opposed IRS bank reporting proposal from the House-passed budget reconciliation bill,” said Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America. “We will continue to vocally oppose this fundamentally flawed policy, in any form, as negotiations proceed in the Senate.

“Keeping the IRS proposal out of the Senate version and any final package will avoid privacy, due process, and data security concerns that have prompted hundreds of thousands of consumer messages to policymakers in opposition,” she added. 

Romero Rainey said there are still “harmful provisions” in the bill, including a new net investment income tax on active S-corp shareholders, a surtax on small businesses held in trusts, and Small Business Administration direct lending, a provision also opposed by the American Bankers Association.

SBA direct lending would “undermine existing successful public-private partnership SBA loan programs while potentially limiting access to capital for those smallest of the small businesses due to increased complexity,” the ABA wrote in a letter cosigned by ICBA and other financial industry trade groups. 

As reported by the Associated Press, the House passed the $2 trillion bill by a 220-213 vote as every Democrat but one backed it, overcoming total Republican opposition. The measure still needs Senate approval. Changes are expected along with disagreements between Democratic moderates and progressives.