Tell Congress to Oppose New IRS Reporting Provisions
As Congress considers critical new infrastructure spending, policymakers are eying unconventional sources of revenue to fund their plans. One proposal under consideration would require credit unions and other financial institutions to report to the Internal Revenue Service (IRS) how much money has gone into and out of accounts holding more than $600.
This unprecedented access to consumers’ personal financial data raises several alarms.
- This proposal would violate consumers’ personal privacy by forcing credit unions and banks to provide the government with information that does not reflect taxable activity.
- Financial institutions—particularly those in rural and low-income communities—would face unnecessary and expensive regulatory hurdles that could make it untenable to serve those consumers already left behind by Wall Street banks.
- The government relies on decades 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.
As negotiations around the $3.5 trillion infrastructure package heat up, the Administration has proposed a new IRS reporting provision that requires financial institutions to report new account holder information. America’s credit unions do not support this additional reporting requirement. This provision would dramatically increase the regulatory burden for financial institutions, undermine the privacy of consumers, and trigger significant data security concerns. All financial institutions currently report to the IRS information related to actual taxable events for members. This new proposal would result in banks and credit unions turning over to the IRS sensitive account details that in and of themselves do not constitute taxable events. This would leave the IRS with a massive trove of personal financial data that would be used in a manner that is not detailed in the proposal and leaves the data vulnerable to a cyber-attack.