NAFCU works to grow and strengthen credit unions by providing federal advocacy, education, and compliance assistance at an unprecedented level of service, passion, and excellence.
With several key policy items being discussed within Washington, our advocacy team constantly strives to share credit unions’ story, secure policy wins, and defend our interests. Currently, we are leading the fight against the proposed IRS reporting requirements for credit unions by highlighting the impact on credit unions and their members.
Congress recently passed a Fiscal Year (FY) 2022 Budget Resolution proposing that credit unions, and all financial institutions, report to the IRS on annual account inflow and outflow information of American taxpayers. While the budget resolution does not have the force of law, it serves as a roadmap for future legislation. First announced in the Biden Administration’s budget, the proposal’s aim is to increase tax compliance and raise revenue to help cover the costs of a proposed $3.5 trillion reconciliation package.
Under this proposal, financial institutions would be required to file an annual information return for all business and personal accounts based on the inflows and outflows each year on any account with over $600 in activity.
We have been proactive in our efforts to educate policymakers about the detrimental impact this would have on credit unions. In our advocacy efforts, we have underscored the need for policymakers to focus on better solutions for taxpayer compliance – such as increased funding and support for the IRS.
We believe that the proposal poses more costs on community institutions than benefits. In a recent letter to the U.S. House of Representatives, we highlight that we cannot support this new reporting requirement without further analysis, and we believe that the IRS is already greatly challenged by problems associated with identity theft, fraud, and cyber leaks.
More reporting requirements can create more challenges for the IRS, who is already underfunded and understaffed. The recent proposal places an unnecessary burden on credit unions. The IRS should focus its attention on data it already has access to, and our team at NAFCU is committed to protecting credit union interests on this pressing issue.