League, CU Representatives Meet with Rep. Luria on IRS Reporting Requirements, Interchange Issues

Your League and credit union officials from ABNB Federal Credit Union and Chartway Federal Credit Union met this morning with Rep. Elaine Luria (D-2nd) to discuss a number of key issues for credit unions.

Chief among those issues: a proposal to expand IRS 1099 reporting requirements for financial institutions. While credit unions view it as good news that the measure was not included during the House Ways and Means Committee's reconciliation discussion, we recognize the issue is far from buried, given that the proposal continues to be pushed by Treasury Secretary Janet Yellin and others within the Biden Administration as a key component of their infrastructure proposal.

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.

We continue to encourage credit union advocates to use the Grassroots Action Center to send a message to lawmakers outlining concerns with the proposal.

We remain deeply concerned about moves in Washington to extend interchange fee limits to credit cards, and other measures related to routing rules, which are designed to make it easier for online merchants to choose the lowest-cost network.

These proposals will not likely result in consumer savings and they represent a legitimate threat to payment processes that are working well for merchants and consumers. They will, however, punish lenders who already bear the burden of fraud losses.

During the meeting, credit unions thanked the Congresswoman for protecting credit union access to military installations, a hot-button issue every year as credit unions are forced to fight off banker efforts to gain rent-free access to military bases. 

The Department of Defense (DOD) has discretionary authority to allow credit unions to use land and space on military bases at a nominal rate, and banks have in the past looked to include language expanding it to include for-profit banks.

We were also encouraged by action this week that added a cannabis banking amendment to the NDAA bill, another positive for credit unions, but especially welcome news in Virginia given the Commonwealth's recent move to legalize marijuana use for adults.

Our discussion with Rep. Luria also touched on national data security and privacy issues, a longstanding area of concern for the nation's credit unions. As an example of our concerns, retailers do not face the same strict data security standards that financial institutions are subject to under Gramm-Leach-Bliley (GLBA). Yet major merchant data breaches expose credit unions to significant monetary costs and reputational risk. 

Credit unions also detailed for the Congresswoman their positive outreach with PPP loans and pandemic-related debt restructuring initiatives. We also noted the role we continue to play in providing affordable credit and encouraging thrift.