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Democrats have updated a Biden administration proposal that would require that banks and credit unions report account activity to the Internal Revenue Service, but banking trade groups remain opposed to the plan.

The original planned called for banks to report to the IRS the total amounts flowing into and out of financial accounts with $600 or more of activity. The new proposal increases that threshold to $10,000 annually and excludes from that amounts from wages and federal programs such as Social Security.

Treasury Secretary Janet Yellen said in a statement yesterday that the plan was needed to close the tax gap, adding that the country’s top wage earners currently exploit the tax system.

“[Tuesday’s] new proposal reflects the Administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe, while protecting American workers by setting the bank account threshold at $10,000 and providing an exemption for wage earners like teachers and firefighters,” Yellen said. “We will continue to work with leaders in Congress to enact this important measure to level the playing field for workers and small businesses, and raise revenue to build our economy back better.”

The American Bankers Association and the Independent Community Bankers of America released statements yesterday voicing continued opposition to the proposal.

“If enacted, this new proposal would still raise the same privacy concerns, increase tax preparation costs for individuals and small businesses, and create significant operational challenges, particularly for community banks,” American Bankers Association president and CEO, Rob Nichols, said in the statement. “Given the IRS’s own recent history, the privacy and data security concerns for Americans are real and should not be taken lightly. That is why Americans across the country have expressed their strong opposition to this proposal. We firmly believe that everyone should honor their tax obligations, but this blunt instrument is not the right tool to solve this problem. We urge lawmakers on both sides of the aisle to listen to their constituents and oppose any efforts to advance this ill-advised reporting regime.”

ICBA president and CEO, Rebeca Romero Rainey, said in a statement that the updates would not salvage the plan or quell public backlash against it.

“The proposed tweaks – such as raising the reporting threshold – would benefit hardly any taxpayers, make the policy more difficult to implement, and do nothing to address the proposal’s privacy, due process, and data security concerns. … The IRS reporting proposal is an invasion of consumers’ privacy, a violation of Americans’ due process, a data security risk amid the agency’s ongoing tax return leak investigation, and a threat to bipartisan efforts to reduce the unbanked population by driving more Americans out of the banking system and toward predatory lenders,” Romero Rainey said.