The U.S. Senate rejected an amendment this week that sought to block new proposed tax reporting requirements on financial institutions from being in the 2022 Budget Resolution.
The amendment, offered by Sen. Mike Crapo (R-ID), was defeated by a vote of 50-49. Many industry groups, including the National Association of Federally-Insured Credit Unions (NAFCU), supported Crapoʻs amendment.
The proposal included in the budget resolution requires financial institutions to report to the Internal Revenue Service (IRS) on the annual inflows and outflows over $600 of all business and personal accounts, as well as transfers between accounts of the same owner.
“We agree that requiring credit unions and other financial institutions to report on gross inflows and outflows for all accounts above $600 is a misguided proposal that stands to pose more harm and burdens on community institutions with uncertain returns,” NAFCU Vice President of Legislative Affairs Brad Thaler wrote to Crapo. “Such a reporting requirement also raises privacy concerns for credit unions and their members. While we support efforts increase taxpayer compliance, we do not believe adding untested reporting requirements to an already heavily regulated industry is the answer.”
The Senate did adopt an amendment from Sen. Ron Wyden (D-OR) that would change the specific $600 threshold to “large” amounts. However, the amendment gives the IRS and Treasury Department the authority to determine what the large threshold amount to establish the reporting requirement is. Thaler said NAFCU will continue to monitor efforts related to this tax proposal.