Tuesday, June 15, 2021

BSA 2.0? What a New IRS Proposal Could Mean for Credit Unions

WASHINGTON– “The devil is going to be in the details,” according to one analysis of what a new Internal Revenue Service proposal could mean for credit unions.

CUNA and NAFCU have joined with other trade groups in sending a letter to the House raising concerns over a proposed new tax reporting requirement included under President Joe Biden's budget proposal.

Under the new reporting requirements, financial institutions would be required to file an annual information return for all business and personal accounts with more than $600 in their account. The annual reporting requirement would include information related to gross inflows and outflows, including the amount of cash, transfers to and from accounts held by the same owner, and transactions with foreign accounts.

In the letter, NAFCU, CUNA and the trades said proposals "to create new reporting requirements for financial institutions appear to impose cost and complexity that are not justified by the potential, and highly uncertain, benefits."

The ‘Door is Open’

NAFCU EVP and General Counsel Carrie Hunt said much remains to be seen as the proposal works its way through Washington.

“The IRS is not saying that much about what credit unions and other financial institutions have to do now,” said Hunt. “The devil is going to be in the details. Treasury has left the door open and this is an evolving issue that remains to be seen.

“But for us, we’ve seen how burdensome it can be when financial institutions are asked to step into the policy arena,” continued Hunt. “BSA is a prime example. It is extremely, extremely burdensome just from a reporting standpoint. We support the goals behind BSA, just as we support the goal of paying the taxes you are obligated to pay. But it is not the role of financial institutions to be policing this.”

CUToday

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