PUB. 18 2021 ISSUE 3

8 JOHN W. ANDERSON EXECUTIVE VICE PRESIDENT NEW MEXICO BANKERS ASSOCIATION EXECUTIVE VICE PRESIDENT’S MESSAGE VISIT OUR WEBSITE AT: NMBANKERS.COM IMPORTANT CONGRESSIONAL AND STATE LEGISLATIVE ISSUES Currently, more than 35 states have legalized cannabis for medical or adult use. But current federal law prevents banks from safely banking cannabis businesses, including ancillary businesses that provide themwith goods and services. I n this quarterly Digest message, I wanted to touch on two important Congressional issues and a couple of state legislative matters that are likely to be considered by the 2022 Legislature. Federal Issues IRS Reporting Proposal in the Federal Reconciliation Package: From time to time, the brain trust in Washington, D.C., comes up with an idea that clearly makes no sense, and I’ll be discussing the latest example. The Biden administration and Treasury Secretary Janet Yellen have called for Congress to include in the federal reconciliation package a new tax information requirement for financial institutions. The NMBA strongly opposes the reporting proposal. While we support adequate funding and resources to promote compliance with our tax laws, we do not support a proposal that would generate a new trove of data that the IRS is unlikely to use or protect and impact privacy for many Americans. The proposal would require financial institutions and other providers of financial services to track and submit to the IRS information of the inflows and outflows of every account above a de minimis threshold of $600 during the year. This proposal would create a dragnet, collecting the financial information of nearly every American and requiring significant resources to build, police, and maintain. Policymakers must consider how account-holder data would be protected and whether a program of this scale and scope infringes on the American people’s reasonable expectation of privacy. The IRS experiences 1.4 billion cyberattacks annually, has had multiple data breaches, and continues to deal with the fallout of identity theft and false tax returns. Adding an entirely new set of data will likely compound the IRS’s systemic problem and expose even more taxpayer data. In addition to the challenges associated with protecting this new data, policymakers should consider the potential unintended consequences of leveraging bank relationships to execute such a large-scale and detailed reporting program. Privacy concerns are already