The Biden Administration’s plan to require banks and credit unions to report data to the IRS from accounts that have “gross flow thresholds” over $600 will not pose an additional regulatory burden on financial institutions, Natasha Sarin, the Treasury Department’s deputy assistant secretary for economic policy wrote Tuesday.
Echoing other administration officials who are pushing the controversial budget proposal, Sarin wrote in a new report that the plan would help close the tax gap and raise an estimated $460 billion over ten years. Sarin said that financial institutions would not have to collect any additional information under the plan.
“To further ensure that everyone pays their fair share, the Administration also calls for using information that financial institutions already possess—without imposing any burden on taxpayers whatsoever—so the IRS can deploy these additional resources to audit more sophisticated tax evaders,” she wrote.
Congressional tax-writing committees this week are reviewing a variety of proposals intended to raise revenue to pay for spending increases being pushed by the administration. It is still unclear whether those panels will rely on the financial institution reporting proposal.
Financial industry trade groups, including credit union groups, have disputed the notion that the proposal will not pose a regulatory burden on their members.
On Wednesday, the Credit Union National Association issued an “action alert” asking credit unions to contact members of Congress and ask them to reject the proposal.
“This proposal would put credit unions and banks in the position of perpetrating an unprecedented invasion of privacy, in addition to creating a significant new compliance burden for credit unions,” CUNA’s Chief Advocacy Officer Ryan Donovan said. “We encourage credit unions to reach out to your staff, members, and other stakeholders, as this directly impacts their day-to-day activities and privacy. We need to tell members of Congress to oppose this provision.
Officials from the National Association of Federally-Insured Credit Unions sent a letter to House Ways and Means Committee leaders Wednesday strongly urging them not to include the provisions in the bill.
“We cannot support adding another new reporting requirement, especially without greater analysis and study of its efficacy,” NAFCU Vice President of Legislative Affairs Brad Thaler wrote. “Any new requirement stands to require significant development costs and process additions for credit unions as well as reconciliation and compliance burdens on their members.”
On Tuesday, Rob Nichols, president/CEO of the American Bankers Association, appealed to congressional leaders to reject the plan, disputing the administration’s position that reporting the data would be easy.
“The amount of information submitted would be massive, unmanageable, and of questionable relevance to the calculation of taxable income,” he wrote.
Nichols said that every financial institution would have to screen every account to determine whether it meets the reporting threshold.
Story updated September 9, 2021, to include NAFCU response.