In Address at Tidewater Chapter, League President Urges Advocates' Action on IRS Reporting Proposal
League President/CEO Carrie Hunt was the special guest speaker at the Tidewater Chapter's Oct. 14 meeting, offering her perspective on one of the thorniest issues currently plaguing the financial services industry -- namely the proposal to expand Internal Revenue Service reporting requirements for financial institutions.
Billed as an effort to crack down on unpaid taxes, mostly from wealthy Americans and big businesses, the Biden administration wants that money to help fund social and economic programs. According to a New York Times article, those unpaid taxes total roughly $7 trillion.
Carrie said the proposal has more to do with politics than policy, and credit unions are justifiably concerned not only about the compliance burden this represents, but the security and member privacy issues that would arise in allowing the IRS to capture this data.
The proposal requires reporting on all banking accounts with a gross flow threshold of $600 – both in and out of the account – (e.g., $300 deposit and $300 withdrawal). Therefore, virtually every American who has a bank account would be captured by this new requirement. Some lawmakers say that the $600 de minimis threshold should be raised. Suggestions of $10,000 have been common, though we maintain the proposal is problematic at virtually any level.
Carrie encouraged attendees at the chapter meeting to ask their members to write their lawmakers in opposition to the proposal.
Carrie also offered her thoughts on the League's legislative advocacy. In advancing our advocacy work, she noted the importance of not only shoring up support from traditional partners, but also looking beyond for other opportunities, including working with bankers, when feasible, or other groups that might share our view on a particular issue.
On the regulatory side, she said the current makeup of the National Credit Union Administration Board (a Democratic chairman and two Republicans) has made for an interesting dynamic -- which recently saw Republicans Kyle Hauptman (vice-chair) and Rodney Hood (member) maneuvering votes on three credit union-supported final rules onto NCUA's coming 2021 Board agendas, over the objection of Chairman Todd Harper.
The CFPB poses its own set of challenges for credit unions, Carrie noted. With Rohit Chopra now serving as director, credit unions can expect the agency to tackle an ambitious agenda, including potentially reopening the small-dollar payday lending rule and proposing changes to the debt collection rule that is set to take effect Nov. 30. Also on the agenda: the recent small-business data collection proposal and a final rule on standards for how fintechs access consumer bank account data.
Credit unions can also expect to see more enforcement actions from the regulator, which sometimes inform NCUA's own supervisory areas of focus.
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