NAFCU to House: Ignore Financial Institution Reporting Proposal

Having lost in the Senate, the National Association of Federally-Insured Credit Unions is asking the House to ensure that its version of an FY22 budget does not allow enactment of a controversial proposal that would require banks and credit unions to report customer transactions.

A similar effort failed in the Senate last week.

“NAFCU has serious concerns about this proposed reporting requirement,” Brad Thaler, the group’s vice president of legislative affairs, wrote in a letter to House members this week.

In his FY22 budget proposal, President Biden proposed requiring financial institutions to report data to the IRS from accounts that have “gross flow thresholds” over $600 as a way of increasing tax compliance. That plan expressed the administration’s preferences and was not binding on Congress.

Next week, the House is scheduled to return to Washington to consider its budget blueprint. That blueprint may not specifically mention the controversial provision, but it likely will direct the tax-writing House Ways and Means Committee and other committees to find budget savings in programs under their jurisdictions. The problem for credit unions is that Biden’s proposal is projected to raise additional revenue by finding tax cheats. Those savings would provide funds for expanded social program spending.

House and Senate committees will consider ways to find additional revenue when they return to Washington after Labor Day.

When the Senate considered its version of the budget resolution, Finance Committee ranking Republican Mike Crapo of Idaho offered an amendment that would have put the Senate on record as opposing the financial institution reporting proposal. That amendment failed.

A key senator said Wednesday that Congress has a long list of tax proposals that will save money or raise additional revenue. “As we go through this process, there will be a menu of options…that the Democratic Caucus will look at,” Senate Banking Committee member Sen. Chris Van Hollen, D-Md., said during an event sponsored by the Center for American Progress, a liberal think tank.

NAFCU and other financial trade groups would like Congress to find budget savings without depending on the financial institution reporting requirement. “We cannot support adding another new reporting requirement, especially without greater analysis and study of its efficacy,” he wrote in his letter. “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.”

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