Removing Barriers Blog

Highway Bill Offset Causes Credit Unions Concern
Posted July 15, 2015 by CUNA Advocacy

In the last several weeks, CUNA and credit unions have found ourselves swept into the discussion of major legislation going through Congress.  Recall that in late May and early June, we successfully removed a provision in trade promotion authority bill that would have required addition reporting on savings and checking accountings accruing less than $10 in interest per year.  This week, our concern is a provision in the Highway Transportation Funding bill that would require additional reporting of mortgage related information to the IRS. 

Current law requires lenders to provide the IRS with each borrower’s name, address and taxpayer identification number, as well as the amount interest paid in the year.  The provision in the House Highway bill would require lenders to include the origination date, the amount of outstanding principal and the property’s address.  Supporters of this requirement say that this will help reduce inaccurate reporting, and raise an estimated $1.806 billion.  And there it is, the reason this provision has been included in the bill:  Congress needs it to pay part of the Highway bill.

Just about everyone agrees that it is good public policy for Congress to pay for the bills they enact into law, but trend of trying to increasing regulatory burden on credit unions and small banks to help pay for these bills is disturbing.  As noted, this is the second time in a month that we have seen this type of maneuver attempted; and we regularly see attempts to raise government guarantee fees as a means for raising revenue. 

Adding to the concern, the methodology for determining the revenue generation is opaque.  The Joint Committee on Taxation generates estimates like this for various provisions and legislation; however, it is often very unclear as to how they have arrived at their conclusion.  There is no requirement that they show their work, so it’s not always clear how a burden like what has been proposed for credit unions and small banks results in the amount of estimated revenue.

Finally, the process by which this provision was included is concerning.  While it is true that a similar – and frankly more burdensome – provision was floated as part of legislation offered last year, the inclusion of this provision in the Highway bill was not widely publicized until it was too late to remove it in the House.

When we became aware of the provision, we immediately reached out to our contacts on the Hill and in industry.  We sent an immediate letter to the leaders of the House Ways and Means Committee and we joined our banking industry partners the next day on a letter to the Senators working on that chamber’s highway bill.  We will continue to work on this issue as the Highway bill moves to the Senate.