WASHINGTON—The House has passed legislation that prevents CUs from facing a potentially costly IRS reporting requirement.
The House Thursday passed a bill that would leave current interest reporting on IRS Form 1099 unchanged but increase penalties for noncompliance. The manager’s amendment, from House Ways and Means Committee Chairman Paul Ryan (R-WI), passed with a 397-32 vote.
Without the manager's amendment, section 603 of the “Trade Preferences Extension Act,” H.R. 1295, would have changed current law to require credit unions, banks and broker/dealers to report to the IRS and members and customers information related to all interest-bearing and non-interest bearing accounts.
“We appreciate Chairman Ryan’s leadership and the committee members' support in averting this potentially costly reporting requirement,” said NAFCU President and CEO Berger. “Removing this onerous measure was a reasonable remedy considering the substantial costs to the financial services industry would far exceed the revenue that would be gained; and it will prevent greater regulatory burden on credit unions.”
Currently, information reports are not required on non-interest-bearing accounts, and there is currently a $10 threshold for reporting on interest-bearing accounts. Reports are filed on Form 1099-INT.
NAFCU and several other financial industry trades wrote House and Senate leaders last week warning about the negative effects the change would impose on the financial services. The groups noted that if the legislation passed “taxpayers will be awash in new 1099s reporting de minimis amounts of interest.” The joint letter added “in many cases, they will report less than a one dollar in earned interest per year.”
NAFCU has been working with the backers of the bill to remove this provision.