With proposals to increase government spending, such as the Build Back Better Act, Congress and the administration have taken a new interest in finding ways to pay for the increased costs. One of the proposals included in the President’s FY 2022 budget request was an enhanced reporting requirement on all inflows and outflows from accounts at financial institutions and fintech entities that total over $600 a year.
Such a new reporting requirement could impact almost all credit union accounts and members, at an increased cost and burden for credit unions. Please urge your elected officials to oppose any attempts to extend reporting requirements on credit unions. As decisions are being made, it is important that lawmakers continue to hear from their constituent credit unions on what is important to you as you continue serving your members.
We believe that requiring credit unions to report on gross inflows and outflows for all accounts above $600 annually stands to pose more costs and burdens on community institutions with uncertain returns. Financial institutions such as credit unions already face a wide range of reporting responsibilities (Forms 1099, 1098, Currency Transaction Reports, and more), not to mention a number of regulatory compliance burdens. 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.
Additionally, such a widespread reporting requirement also raises privacy concerns for credit unions and their members. The IRS is already being challenged to handle the problems associated with identity theft and false tax returns filed to claim refunds. The collection of this additional data is only likely to aggravate the problem of identity theft and taxpayer privacy in the current environment.
While we support efforts to increase taxpayer compliance, we do not believe adding untested reporting requirements to an already heavily regulated industry is the answer. Instead, we encourage Congress and the Administration to seek better solutions for taxpayer compliance.
SAMPLE letter to legislators:
I write today on behalf of DFCU Financial in (BRANCH CITY) to urge you to oppose any effort to establish new IRS reporting requirements for credit unions on any total inflows and outflows over $600 on an annual basis.
Such a move would create additional compliance costs and regulatory burdens that will have a significant impact on my credit union and our members.
Requiring this kind of new reporting will pose more costs and burdens on community institutions with uncertain returns. My credit union already faces a wide range of reporting responsibilities including forms 1099, 1098, Suspicious Activity Reports, Currency Transaction Reports, and more, not to mention a number of regulatory compliance burdens.
I urge you to explore other options for raising revenue from increased tax compliance, and to oppose any effort to create additional reporting requirements or regulations on credit unions and our members.