WASHINGTON 94/17/08)—A House and Senate conference committee on a farm reauthorization bill agreed to drop a controversial plan to require credit and debit card payment processors to report to the Internal Revenue Service (IRS) the aggregate annual payments made to merchants. The Credit Union National Association (CUNA) lobbied vigorously to get the provision removed because of the detrimental effect it could have on credit unions. The provision was slated to be used as a revenue raising measure to offset increased spending in the omnibus legislation reauthorizing federal farm programs for five years. Billed as a means to close the "tax gap”--the difference between the amount of taxes owed the federal government and the amount actually collected—this provision originated in the President's FY 2009 budget outline. The proposal would have required merchant acquiring banks and credit unions, those institutions that make card payment reimbursements to merchants, to report to the IRS total merchant payments on an annual basis. In a letter to the House and Senate farm bill conferees, CUNA President/CEO Dan Mica wrote,”CUNA recognizes that the intent of the reporting provision is to close the “tax gap” and to collect taxes that are legitimately owed to the Internal Revenue Service. However, this objective can be met through the IRS’s traditional auditing process, with fraud and underreporting subject to stiff IRS fines and criminal penalties." Mica continued, "For affected institutions, this provision (would) add to the substantive compliance burden they already face. Credit unions make every effort to minimize loan rates and fees to consumers, and federal credit unions operate under a loan rate ceiling under the Federal Credit Union Act. As a result, this proposal will place a disproportionate burden on credit unions covered by its provisions." CUNA lobbyists have been informed that this card reporting proposal will be resurrected again and possibly attached to any number of pieces of future legislation. However, based on Mica's letters and an intense lobbying effort, CUNA has been invited to congressional tax staff discussions on the provision. These tax staffers have indicated a willingness to mitigate the proposal's effect on credit unions. CUNA lobbyists will continue to work with congressional tax writers to remove credit unions from the application of the reporting proposal. Mica also urged that the Congressional tax writing committees hold hearings to discuss the cost/benefit analysis of the proposal, as well as any unintended consequences the plan might generate.