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NAFCU urges Biden and Congressional leaders to abandon IRS reporting requirement
In a joint letter to President Joe Biden, Treasury Secretary Janet Yellen, Senate Majority Leader Chuck Schumer, D-N.Y., and Speaker of the House Speaker Nancy Pelosi, D-Calif., NAFCU and several associations representing cooperative businesses voiced their strong opposition against the proposed IRS reporting requirement. The Administration and Congressional leaders last week outlined a new reconciliation package framework that backs away from the provision, however, the final legislation and bill text could still contain the reporting requirement.
The authors of the letter, who focus on member-owned and controlled enterprises, noted that while they “share the Administration's goal of building a more inclusive and equitable financial system,” this invasive reporting regime is not a sound solution to achieving that goal.
“This approach fails to adequately reach people who are cheating our nation’s tax laws and instead places undue burdens on average consumers and their financial institution,” wrote the associations. The reporting requirement would spotlight inflows and outflows of essentially all taxpayers, including low-income consumers, with transactions for childcare, rent, or student loans potentially exceeding the threshold.
The group also reiterated that the members they serve, including cooperatives and credit unions, “operate on thrift and in the best interest of the people and community they serve, not outside shareholders.”
“Not only could these increased exemptions create compliance burdens, but they will also likely create consumer confusion on what is included and what is not,” stated the authors. Expressing the major financial privacy concern with the proposal, the authors flagged the IRS’s history of vulnerability to data breaches.
The associations concluded the letter by pointing out that this reporting regime could lessen the trust consumers have towards financial institutions, perhaps even deterring financially-vulnerable consumers from having their financial services needs met by credit unions.
Joining NAFCU on the letter were the National Cooperative Business Association CLUSA, the Credit Union National Association, the Farm Credit Council, the National Council of Farmer Cooperatives, and the U.S. Federation of Worker Cooperatives.
NAFCU continues to voice opposition against the proposed IRS reporting requirement. The association facilitated credit union involvement in urging Congress to withdraw the proposal through advocacy efforts and has remained engaged with lawmakers to ensure its exclusion from the Build Back Better Act.
Stay tuned to NAFCU Today for the latest on the legislation as it moves through Congress and view the association’s advocacy page on this issue for more information.