President and CEO of NexTier Bank, Clem Rosenberger, joined bank leaders from across the country Tuesday at a virtual roundtable discussion to talk about a policy proposed by the Biden administration.

That policy would require banks to report annual cash flow from certain accounts to the Internal Revenue Service in order to cut down on the cash gap that is recorded each year due to individuals filing taxes incorrectly.

Rosenberger said many banks, including NexTier, already have staff members who ensure the institution is in compliance with regulations, but banks could have to hire more staff members to account for more regulations.

“Every day we are continuing to grow our compliance department and risk department to look at new regulatory proposals and comply,” Rosenberger said. “There would have to be a large leap in making this effective. There is so much complication to this.”

The U.S. Treasury in a fact sheet it released estimated that the cost of tax evasion among the top one percent of taxpayers exceeds $160 billion a year, and the proposed IRS policy would help alleviate that gap.

Rep. Mike Kelly, R-16th, who organized the event and who is also a member of the House Ways and Means Committee's Oversight Subcommittee, led the conversation to hear from bank administrators from around the country. He pointed to Rosenberger as a local example of how banks would be affected by a policy of this kind.

Rosenberger said current talks about the IRS policy could indicate that in addition to banks being subject to more regulations, customers' annual spending could also be monitored if their cash flow exceeds a certain amount not reported in salaries or wages. The initial proposal required banks to report accounts exceeding $600 in cash flow not reported in salary or wages, but the revised draft would require reporting at $10,000.

According to the release from the treasury, banks would add two additional data points to the information that is already supplied to the IRS, which are how much money went into the account over the course of the year and how much came out.

Rosenberger said this could impact bank customers on a local level.

“A customer who goes out on a date night, pays for dinner, pays for movie tickets, pays for a babysitter — that's not a taxable event,” Rosenberger said. “Yet we are being told by the treasury department that this is something that should be aggregated and reported on.”

According to Rosenberger, the implementation of any kind of monitoring system for customers would be difficult to manage, and this could cause banks to raise rates for customers.

“Banks don't have the reporting systems to even accomplish this today if we wanted to,” Rosenberger said. “Any additional costs have to be justified and either absorbed somewhere or passed on to our customer base.

“At the end of the day, a return is expected by shareholders.”