Internal Revenue Service, Washington D.C. (Source: Shutterstock)
In the nearly five months of lobbying against the proposed IRS reporting requirement, credit unions, banks and nearly all parties in the financial industry have voiced their opposition. This week, cooperative organizations joined NAFCU and CUNA in the pushback efforts with a joint letter to President Joe Biden, U.S. Department of Treasury Secretary Janet Yellen and Democratic leaders of the House and Senate.
In the letter, the organizations stated their cooperative structure is somewhat at odds with the proposal of more strict IRS reporting requirements. "Because of this, we share the Administration's goal of building a more inclusive and equitable financial system, but we do not believe the new proposed IRS reporting requirements will meet our shared goal," the letter stated.
The letter, signed by CUNA, NAFCU, the Farm Credit Council, the National Cooperative Business Association CLUSA, the National Council of Farmer Cooperatives and the U.S. Federation of Worker Cooperatives, raised concerns over the proposal falling short of its ability to catch those attempting to be dishonest trying to cheat the tax laws.
"Fundamentally, we are concerned about the proposed dramatic change in approach focusing on overall account flows. This approach fails to adequately reach people who are cheating our nation's tax laws and instead places undue burdens on average consumers and their financial institution," it said.
The IRS proposal was stricken from the reconciliation legislation last week, but it could be reinserted at any time as negotiations continue. The proposed reporting requirement would have required financial institutions to report inflows and outflows of personal and business accounts, as well as transfers between accounts of the same owner, if it is more than $10,000 per year.
According to CUNA, "nearly 800,000 credit union stakeholders wrote to Capitol Hill with their concerns" after CUNA and NAFCU issued an action alert for the industry at large in September.
Despite the proposal being off the table for now, the credit union and now cooperative industries aren't letting up to ensure the proposal does not return.
"Our diverse memberships include many consumers who may otherwise be under- or unbanked, and we are concerned that this proposal could not only negatively impact the trust in financial institutions they have built, but also may deter people who are currently financially vulnerable from using the safe, reliable services credit unions offer," the letter stated.
Lawmakers have continued to negotiate the reconciliation legislation details with no firm deadline for a final vote.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
