WASHINGTON—A proposal that would have required credit unions to report deposits/withdrawals of more than $600 to the Internal Revenue Service has been removed from legislation currently before Congress.
The legislation was strongly opposed by credit unions, as well as by many members of Congress, several of whom expressed their opposition in remarks to NAFCU’s Congressional Caucus this week (see related stories).
As CUToday.info has reported, the proposal would have required reporting to the IRS on gross inflows and outflows of account holders, both businesses and individuals, with a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner.
Even with the proposal scuttled, CUNA sent a letter sent to the House Ways and Means Committee in advance of its markup of the Build Back Better Act that reiterated its position.
“This proposal would have credit unions reporting nontaxable activity to the federal government. This is frankly an invasion of credit union member privacy because this information cannot be directly used to ascertain a taxpayer’s tax liability,” the letter reads.
Cybersecurity Concerns
CUNA said it also has concerns related to cybersecurity should the IRS be responsible for collecting this data, as there have been several recent breaches of government systems that raise questions about the government’s ability to keep the data secure.
Moreover, “We also have concerns regarding the added regulatory burden this proposal would impose on credit unions,” the letter adds. “To comply with the requirements of this proposal, credit unions will have to hire firms to update software, train staff on new procedures, manage member complaints regarding the requirement to turn this information over to the government, and take other action. All of this will come at a cost to credit union members.”
CUNA had earlier issued an action alert calling on credit unions to share their concerns with policymakers, and Rep. Tom Emmer (R-Minn.) led a letter signed by more than 140 members of Congress expressing similar concerns, CUNA added.
NAFCU Expresses Opposition
Emmer spoke to NAFCU’s Congressional Caucus on Monday and addressed the issue.
NAFCU has also expressed opposition to the proposal, with CEO Dan Berger telling the meeting it would have put credit unions in the position of being law enforcement.
The League of Southeastern Credit Unions, which represents Florida, Alabama and Georgia, also said it sent letters to members of its respective congressional delegations thanking them for their work in removing the language.