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Removing Barriers Blog

H.R. 1295, Section 603 on Interest Reporting Requirements
Posted June 03, 2015 by CUNA Advocacy

A group of financial services trade associations, including CUNA, sent a letter to Senate and House leadership expressing concern over section 603 of H.R. 1295, the Trade Preferences Extension Act which passed the Senate on May 18.  Section 603 would change current law to require banks, credit unions and broker/dealers to report to the IRS and their customers all interest bearing as well as non-interest bearing accounts. Currently, information reports are not required on non-interest accounts, while there is a $10 threshold for reporting on interest bearing accounts. The change would be effective for the current tax year of 2015; credit unions and banks would have very little time to adapt their systems to comply with this timeline.  

The provision will cause taxpayers to be awash in new 1099s reporting de minimis amounts of interest. In many cases, they will report less than one dollar in earned interest per year. Additionally, this new reporting requirement will impose substantial costs on the financial services industry that far exceed the revenue that will be gained by the proposal. 

Many information reports will contain no interest at all, resulting in confusion for taxpayers who may not be aware of our new reporting requirements. This will create an environment ripe for taxpayer and IRS error and may trigger unnecessary audits. The nominal benefit this bill could generate in the form of tax revenue will not outweigh the costs it will impose. CUNA strongly urged that this section be removed as quickly as possible.