Financial Trade Groups: Biden Plan to Close ‘Tax Gap’ Would Pose Huge Burden on Credit Unions, Banks

A Biden Administration proposal to require banks and credit unions to report information on customer account “flows” would create a huge burden for those institutions, financial service trade groups, including the Credit Union National Association and the National Association of Federally-Insured Credit Unions, told the Senate Finance Committee’s Taxation and IRS Oversight Subcommittee this week.

IRS: Credit Unions Are Free to Seize Stimulus Payments

Despite efforts by financial industry and consumer groups to reverse the policy, the third round of Economic Impact Payments to individuals may be seized by states and creditors, a Biden Administration official has told senators.

“After a payment in the third round of EIPs is deposited into an individual’s bank account, federal law does not protect that amount from state offsets or from garnishment by creditors,” Aruna Kalyanam, the Treasury Department’s deputy assistant secretary for tax and budget in the Office of Legislative Affairs, wrote in a letter to Sens. Joe Manchin (D-W.V.) and Maggie Hassan (D-N.H.).