In autumn 2021, the US Congress was searching for unconventional revenue sources as they debated the Build Back Better Plan. They proposed a method of closing the ‘tax gap’ by requiring financial institutions to report additional financial details about account holders.
The final form of the plan would have impacted nearly every American unless they used only cash to pay bills and purchase goods. Financial institutions would have been required to report information on any account in which the total inflows and outflows over a year totaled more than $10,000. Wage income from certain payroll companies and from Social Security checks would have been exempt from reporting.
We asked our members to send messages to their elected officials in Washington urging them to leave this provision out of the final bill. Numerous financial institutions across the country participated in this effort and it was successful as detailed in the paragraphs below.
October 28, 2021 update – The White House’s budget reconciliation framework for the infrastructure legislation did not contain the credit union-opposed provision requiring increased reporting to the Internal Revenue Service.
November 26, 2021 update – The U.S. House of Representatives passed the Build Back Better infrastructure bill on November 19. It did not include the original proposal requiring financial institutions to increase reporting to the IRS. The bill then headed to the Senate where it was not passed.
This proposal would violate the personal privacy of members like you by forcing credit unions and other financial institutions to provide the government with information that does not reflect taxable activity.
The government relies on decades-old systems to store and secure IRS information. These systems have been compromised in recent years. Adding additional data increases the personal harm that could occur to you and millions of other Americans in a future data breach.
Financial institutions – particularly those in rural and low-income areas – would face a new and expensive regulatory burden that could make it untenable to service those communities already left behind by Wall Street banks.