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NAFCU To House: Remove New IRS Reporting Requirements; Focus on Better Solutions For Taxpayer Compliance
In a letter to the U.S. House of Representatives yesterday, NAFCU’s Brad Thaler urged House members to remove a provision from the Senate-passed Fiscal Year (FY) 2022 Budget Resolution proposing that credit unions report to the IRS on annual account inflow and outflow information of American taxpayers. In the letter, Thaler, NAFCU’s Vice President of Legislative Affairs, urges policymakers to instead focus on better solutions for taxpayer compliance such as increased funding and support for the IRS.
The IRS proposal was first announced in the president’s budget and included in the budget resolution approved by the Senate as a way to increase tax compliance and raise revenue to help cover the costs of a proposed $3.5 Trillion dollar reconciliation package. As proposed in the president’s budget, financial institutions would be required to file an annual information return for any and all business and personal accounts based on the inflows and outflows in a given year on any account with over $600 in activity. While the provision in the budget resolution does not carry the weight of law, it does establish a roadmap for future legislative efforts, such as the reconciliation package.
In the letter, Thaler reiterates NAFCU’s opposition to the proposal as it “stands to pose more costs and burdens on community institutions with uncertain returns. We cannot support adding another new reporting requirement, especially without greater analysis and study of its efficacy. Any new requirement stands to require significant development costs and process additions for credit unions as well as reconciliation and compliance burdens on their members.”
Lastly, Thaler raises privacy concerns as a result of these new reporting requirements. “The IRS is already being challenged to handle the problems associated with identity theft and false tax returns filed to claim refunds, not to mention leaks of some taxpayer information. The collection of this additional data is only likely to aggravate the problem of identity theft and taxpayer privacy in the current environment.”
The House is scheduled to return from August recess next week to begin consideration of the budget resolution. NAFCU will continue to engage Congress and the Administration to prevent new burdens on credit unions.