Biden’s IRS Reporting Proposal for FIs Still in Play; Critical CUs Continue Outreach to Lawmakers

Congress might still include a proposal in budget reconciliation that would require financial institutions to report inflows and outflows for many more accounts to the IRS, despite resistance from the banking industry.

The proposal is "still being considered, and we don't have a timeline beyond that," Senate Finance Committee spokesperson Ashley Schapitl told S&P Global Market Intelligence on Sept. 22. In the House, the Ways and Means Committee's bill excluded the provision.

The proposal would require depository institutions to report nontaxable activity, including the gross amount flowing into and out of accounts holding more than $600, all in an effort to identify unreported taxable income.

We continue to argue that the proposal represents a costly regulatory burden for financial institutions, would violate consumers' privacy, and that the collection of this data would make the IRS an even more tempting target for criminals.

The League continues to encourage credit union advocates to use the Grassroots Action Center to send a message to lawmakers outlining our concerns with the proposal.