WASHINGTON—Six financial services trade groups, including CUNA and NAFCU, have sent a letter to congressional leadership expressing “grave concern” over what the groups called an “onerous revenue provision” included in the Trade Preferences Extension Act (H.R. 1295). That bill passed the Senate on May 14.
Specifically, the groups noted, Section 603 of the legislation would change current law to require banks, credit unions and broker/dealers “to report to the Internal Revenue Service and our customers/members on all interest bearing as well as non-interest bearing accounts. Currently, information reports are not required on non-interest accounts, while there is a $10 threshold for reporting on interest bearing accounts. The new law makes the change effective for the current tax year of 2015, giving banks and credit unions little time to adapt their systems for compliance,” the letter states.
“Should this provision be enacted, taxpayers will be awash in new 1099s reporting de minimis amounts of interest,” the trade groups stated. “In many cases, they will report less than a one dollar in earned interest per year. 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 trade groups noted that many information reports will contain no interest at all, resulting in what they said will be 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 nominal tax revenue raised by this provision will come at the costs of added complexity to industry and will be an unnecessary nuisance for nearly every American,” the six groups said. “We strongly oppose Section 603 because of its harmful consumer impact and urge you to remove this section from H.R. 1295 as soon as possible.”
In addition to NAFCU and CUNA, the letter was signed by the American Bankers Association, Consumer Bankers Association, Financial Services Roundtable, and the Independent Community Bankers of America.