99 Organizations Plead With President to Reject IRS Reporting Proposal

After months of discussions and numerous letters sent to members of Congress to stop the progression of the proposed IRS reporting requirements for financial institutions, a group of 99 trade organizations from a variety of industries sent a letter on Monday to President Joe Biden as a personal plea to remove the proposal for good.

Last week, lawmakers released an updated proposal that would have credit unions and banks reporting all inflows and outflows of personal and business accounts to the IRS of amounts more than $10,000. The first draft of the proposal had the threshold at $600. Lawmakers have the IRS reporting requirements included for consideration in the ongoing debate of the budget reconciliation package.

NAFCU, CUNA, the ABA and dozens of other organizations stated in the letter, “We respectfully request that this proposal be withdrawn from further consideration, and the administration consider more targeted measures to reduce the tax gap.”

The letter continued, “Our member companies understand that this proposal is a good-faith attempt by your administration to ensure all taxpayers meet their tax obligations, and we strongly support that goal. However, our members, and the American people, believe that they have a reasonable right to privacy and this overly broad proposal to report gross annual inflows and outflows from nearly every account is disconnected from its purported narrow purpose of focusing government scrutiny on Americans with actual income above $400,000.”

According to the letter and a statement from NAFCU, the 99 organizations’ concerns over the proposal included:

• “A large number of common and totally innocent transactions by individuals and small businesses will be captured by this new regime.
• Insufficient study or detailed examination to show consumer impact.
• Major financial privacy concerns for taxpayers.
• Increased burdensome reporting for financial institutions.
• Substantial expansion of IRS authority, which is likely to expand than rather than be rolled back in the future.”

Also last week, Sen. Tim Scott (R-S.C.) introduced the “Prohibiting IRS Financial Surveillance Act” on Thursday to bar the implementation of “increased financial institution reporting to the Internal Revenue Service.” CUNA and NAFCU came out strongly in favor of this bill.

Credit union trade organizations have been pushing back on the IRS reporting requirement proposal since it came out in late June. CUNA and NAFCU launched their Grassroots Action Center to mobilize credit union leaders to voice their opposition to the proposal.