CUNA joined several organizations Wednesday to encourage Congress to carefully assess the costs and benefits of imposing a new level of data collection to the tax reporting structure. President Joe Biden’s FY22 budget proposal includes language about requiring financial institutions to report information on account flows.

“This proposal will have real costs, not only for government, but also for financial institutions, small businesses, and individual taxpayers,” the letter reads. “Strengthening IRS funding and overhauling outdated technology to use existing information reporting to facilitate targeted auditing of questionable tax returns is a much more efficient and effective approach to closing the tax gap.”

The letter also notes:

• Financial institution reporting is already robust, and the organizations suggest a further cost-benefit analysis for an additional reporting requirements;
• New reporting would appear to require material development costs and process additions for financial institutions;
• Some of the estimates that have been used to derive the expected benefits from this proposal may be outdated and misleading;
• The scope and scale of the proposal will have significant privacy and data protection
• Ramifications; and
• Providing enhanced resources for IRS audits is a more “effective, efficient, and fair” approach.