Tell Congress to Oppose New IRS Reporting Provisions
As Congress considers critical spending packages, lawmakers are considering unconventional sources of revenue. One proposal under consideration would require financial institutions, like Discovery Federal Credit Union, to report to the Internal Revenue Service (IRS) new details on their customers ‘/members’ accounts. The proposal will require credit unions, banks, and other financial institutions to monitor deposits and withdrawals in accounts that have balances above $600 at any time during the year. Such an unprecedented grab of your personal financial data raises several concerns.
This proposal would violate the personal privacy of consumers, like you, by forcing credit unions, banks and other financial institutions to provide the government with information that does not reflect the taxable activity.
Financial institutions – particularly those in rural and low-income communities – would face a new and expensive regulatory burden that could make it untenable to serve those consumers already left behind by Wall Street Banks.
The government relies on decades of old data systems to store and secure IRS information. These systems have already been compromised in recent years, and the addition of this type of data only increases the likelihood of a future breach of your personal financial information.
At Discovery Federal Credit Union, we value civic engagement and believe it’s our duty to inform you when legislation is being discussed that could directly affect you.
The Credit Union National Association (CUNA), the most influential financial services trade association and the only association that advocates on behalf of all America’s credit unions has developed a webpage with more information regarding this proposal and an e-mail template you can easily send to your U.S. Representative.
Please consider lending your voice to this important effort – click here to learn more and send an e-mail to your U.S. Representative.
Tell Congress to reject this new IRS reporting provision.
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What’s the basic proposal?
The proposal would require credit unions, banks, and other financial service providers to track and submit information to the IRS about the total inflows and outflows of every account that features a balance above $600 at any point during the year, or with at least that much in annual transactions. The information could include physical cash transactions per account, transactions with a foreign account, and transactions between accounts held by the same owner. The IRS wouldn’t receive details on individual transactions, but rather, gross yearly totals.
Some media reports have indicated the $600 figure could be increased to a higher amount, like $10,000, the level at which credit unions, banks, and other financial institutions report transactions in an effort to combat money laundering.
Will members need to do anything?
No. A treasury summary of the plan indicated there would be no further recordkeeping keeping or reporting requirements for individuals or businesses. Credit unions, banks, and financial providers already report interest income above $10 by issuing a Form 1099-INT when applicable.
Would Credit Unions face new obligations?
Yes. Credit unions, banks, and other financial institutions would need to track and report all of this new transaction activity to the IRS. This will increase operating costs.
Would Credit Unions face more liability?
Possibly. Privacy concerns are one of the key criticisms of the proposal, especially if they resulted from a data breach. This proposal will create significant operational challenges for credit unions, banks, and other financial institutions, increase tax-preparation costs for individuals and small businesses, and create serious financial privacy concerns.
What is the tax gap?
The tax gap is the difference between what the IRS collects on behalf of the government and what the agency estimates that all taxpayers legally owe.
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