CUNA wrote in strong support of an amendment to the Senate Budget Resolution that would block expanding taxpayer information reporting requirements for financial institutions. The amendment was offered by Sen. Mike Crapo (R-Idaho), in response to an administration proposal that financial institutions be required to report additional accountholder information to the Internal Revenue Service. It was voted down Tuesday afternoon by a 50-49 vote.
“Banks, credit unions, and other entities would be required to annually report to the IRS the gross inflows and outflows of account holders (businesses and individuals) with a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner,” the letter reads. “CUNA remains concerned about the effect this proposed new requirement will have on credit unions. Privacy and data security are paramount issues. Whether it is the massive data breach at the federal Office of Personnel Management in 2014 or this year’s IRS leak of federal tax returns of many wealthy Americans, CUNA remains doubtful that such data will be safe and private.
“Also, smaller credit unions would be especially burdened by this new proposal. From the increased costs of software upgrades to staff training, smaller institutions would perhaps need financial resources and additional time for implementation to meet new requirements,” it adds.
CUNA also has concerns about how the proposal will affect accounts that are comingled with business and personal funds, as well as how jointly held accounts would be treated.
“CUNA also wants to avoid any intended consequences that may arise from the Administration’s proposal,” the letter reads, noting similar requirements in the Foreign Account Tax Compliance Act of 2010 resulted in many Americans overseas losing access to the banking system.
“Credit unions and other financial institutions already churn out many federal tax information reporting forms,” the letter reads. “This new requirement further puts credit unions in the position of further policing their members and account holders. CUNA believes that better that better tax compliance can be achieved through other means such as the IRS using its existing audit authority.”