Update — October 29, 2021: Jim Nussle, President and CEO of the Credit Union National Association, reported that the IRS reporting proposal was left out of the reconciliation legislation that was released by Congress on Oct. 28. Earlier this week, 21 House Democrats called for the proposal to be withdrawn and House Minority Leader Kevin McCarthy (R-Calif.) hosted a live roundtable with Eric Bruen, President and CEO for Desert Valleys Credit Union to discuss the privacy issues that it would cause. Check back for updates as the bill works its way through the legislative process.
Update — October 15, 2021: H.R. 5586 - Prohibiting IRS Financial Surveillance Act was introduced to the House of Representatives "to prohibit the implementation of new requirements to report bank account deposits and withdrawals." This bill has been referred to the House Committee on Financial Services.
In May, S.1788 (Restoring the IRS Act) was introduced in the Senate with the purpose of increasing funds for the Internal Revenue Service to expand the ability to perform audits and enforce tax compliance. However, these efforts come at the expense of Americans’ privacy.
Based on the original proposal, which is being considered as part of the Department of the Treasury’s FY22 Revenue Proposal, financial institutions would be required to provide the IRS with the following information in an annual return for accounts with a balance of $600 or higher:
• Name, address and TIN number for the account holder
• Gross inflows and outflows
• Amount of inflows and outflows related to cash transactions, foreign transactions and transfers to related accounts (in the case of an account that’s not related to a trade or business)
Take Action Now
Credit Union trade groups are worried about the burden on smaller credit unions and security breaches, among other things. The Credit Union National Association (CUNA) lists the following concerns.
• This proposal would violate the personal privacy of consumers like you by forcing credit unions and other financial institutions to provide the government with information that does not reflect taxable activity.
• Financial institutions — particularly those in rural and low-income communities — would face a new and expensive regulatory burden that could make it untenable to serve those consumers already left behind by Wall Street banks.
• The government relies on decades old data systems to store and secure IRS information. These systems have already been compromised in recent years. The addition of this type of data only increases the likelihood of a future breach of your personal financial information.
As of October 13, nearly 500,000 messages were sent from taxpayers to Capitol Hill using the CUNA Grassroots Action Center. If you would like to share your thoughts with lawmakers on the IRS reporting policy, click here.