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Ahead of a Senate Finance subcommittee hearing today to examine tax evasion and noncompliance, NAFCU joined with several other financial services industry trades to flag concerns with a possible new tax reporting requirement included under the American Families Plan Act.

In Biden's proposed plan, there is a potential new tax reporting burden on credit unions and banks as the administration looks to shore up unreported and misreported income.

NAFCU and the trades said proposals "to create new reporting requirements for financial institutions would impose cost and complexity that are not justified by the potential, and highly uncertain, benefits. Furthermore, we believe additional reporting requirements guided by subjective criteria have privacy and fairness implications and the potential to put financial institutions in an untenable position with their account holders."

While specific details on how such a requirement would work have yet to be determined, the trades said it is important to consider the costs and benefits of adding additional burdens to the complex tax reporting structure as lawmakers discuss feasibility and possible implementation.

NAFCU and the trades detailed the robust reporting financial institutions already provide related to income and bank accounts and argued adding a new reporting structure would create significant costs and burdens, not only on financial institutions but also individuals and businesses.

Rather than adding new requirements, the trades recommended Congress look to provide the IRS with additional resources needed to conduct effective and efficient audits.

NAFCU will continue to monitor efforts related to this tax proposal and advocate against any provisions that would increase credit unions' compliance and reporting burdens.