WASHINGTON (6/4/15)--A provision in a Senate-passed bill that would require reporting on a number of account types would be an unnecessary nuisance for nearly every American, CUNA believes.
In a letter sent Wednesday to Senate Majority Leader Mitch McConnell (R-Ky.) and Speaker of the House John Boehner (R-Ohio), CUNA and its coalition partners expressed grave concerns about the added time and money costs this requirement would bring.
The Trade Preferences Extension Act (H.R. 1295) passed the Senate on May 14. Section 603 of the bill would change current law to require credit unions, banks and broker/dealers to report to the Internal Revenue Service and consumers on all interest bearing as well as non-interest bearing accounts. This change would become effective for the current tax year 2015.
Currently, reports are not required on non-interest accounts, while there is a $10 threshold for reporting on interest bearing accounts.
“Should this provision be enacted, taxpayers will be awash in new 1099s reporting de minimis amounts of interest. In many cases, they will report less than a one dollar in earned interest per year,” the letter reads. “Additionally, this new reporting requirement will impose substantial costs on the financial services industry that far exceed the revenue that will be gained by the proposal.”
The letter adds that many information reports will contain no interest at all, resulting in confusion for taxpayers who may not be aware of the new reporting requirements.
"This will create an environment ripe for taxpayer and IRS error and may trigger unnecessary audits,” the letter reads.
In addition to CUNA, the letter was signed by the American Bankers Association, Consumer Bankers Association, Financial Services Roundtable, Independent Community Bankers of America and the National Association of Federal Credit Unions.