IRS Reporting Requirement Has Turned Into Uphill Battle for CUs

 

It’s in. It’s out. It’s in again.

On Thursday, NAFCU, CUNA and more than 100 associations sent a letter to all members of the U.S. House of Representatives and Senate asking them to reject a proposed IRS reporting requirement that credit union trades have been pushing back against since July.

The proposed IRS reporting requirement would require financial institutions, including credit unions, to report the inflows and outflows of personal and business accounts, as well as transfers between accounts of the same owner, if it is more than $600 per year.

The proposal found new life inside the House version of the budget reconciliation bill after it was rejected in the version approved by the House Ways and Means Committee last month. On Tuesday, Speaker of the House Nancy Pelosi (D-Calif.) said the IRS reporting requirement would be included in the House version of the bill.

CUNA, NAFCU and other organizations voiced their objections to the proposal in a joint letter. While the letter stated that the groups understand the intention that IRS reporting requirements are tied to an attempt to identify those committing tax fraud, “the unintended consequence is the overly broad proposal will directly impact almost every American and small business with an account at a financial institution.”

“We believe that this program is costly for all parties, not fit for purpose, and loaded with the potential for unintended and serious negative consequences,” the letter stated. “As associations representing a broad cross-section of financial and business interests, we urge you to oppose any efforts to institute this new reporting regime.”

While there have been reported compromises to the proposal to increase the threshold from $600 to $10,000, the group’s letter pushed back on the possible compromise. “While recent proposals suggest that increasing the de minimis threshold to $10,000 is less objectionable, this is a flawed assumption and will not significantly reduce the scale of this new IRS program.”

According to CUNA, nearly 500,000 messages have been sent by credit union stakeholders responding to action alerts to send their concerns to Capitol Hill using CUNA’s Grassroots Action Center.

In a statement, Ryan Donovan, CUNA chief advocacy officer said, “Their concern is shared by Americans of every walk of life. We are disappointed that Congress continues to have this on the table.”