Removing Barriers Blog

CUNA & Trades write to Senate Finance Subcommittee
Posted May 11, 2021 by CUNA Advocacy

CUNA joined other organizations to write to the Senate Finance Subcommittee on Taxation and IRS Oversight prior to the hearing on lost revenue from tax noncompliance. Congress should carefully assess the costs and benefits of imposing a new level of data collection on the already over-complicated tax reporting structure. 

The organizations letter responds to a section in President Joe Biden’s American Families Plan that would require financial institutions to report information on account flows so “earnings from investment and business activity” are subject to reporting closer to that of wages.

“Recent proposals to create new reporting requirements for financial institutions would impose cost and complexity that are not justified by the potential, and highly uncertain, benefits,” the letter reads. “Furthermore, we believe additional reporting requirements guided by subjective criteria have privacy and fairness implications and the potential to put financial institutions in an untenable position with their account holders.”

CUNA notes that strengthening Internal Revenue Service (IRS) funding to facilitate targeted auditing of questionable tax returns is a much more efficient and effective approach.

The organizations also note:

  • Financial institution reporting is already robust, and the organizations suggest a further cost-benefit analysis for an additional reporting requirement;
  • New reporting would appear to require material development costs and process additions for financial institutions; and
  • Some of the estimates that have been used to derive the expected benefits from this proposal may be outdated and misleading.