Both the House and Senate included language to allow this proposal in the FY 2022 Budget Resolution and it is still a candidate for inclusion in the Build Back Better Act budget reconciliation package Lawmakers are considering a threshold of $10,000 in annual flows but with exemptions for deposits from payroll processors and an equivalent amount of annual outflow, as well as an exemption for large purchases like a home down payment.. This would require credit unions to identify wage or salary payments in a member's account and then apply an account-specific outflow exemption equal to total annual wage or salary income. This modified proposal, in addition to creating compliance challenges and costs, would still likely capture many everyday working Americans.
With the issue kept alive in the FY 2022 Budget Resolution, the threat has not passed, and proposed exemptions would make compliance with the requirement more difficult and costly, while still impacting the majority of consumers. We urge lawmakers to reject any legislative effort to place new IRS reporting requirements on credit unions, at any threshold and regardless of any exemptions. While NAFCU supports efforts to close the tax gap and increase tax compliance, creating additional burdens and costs on credit unions, and placing the financial privacy of more than 127 million credit union members at risk is not the way to go. We urge Congress to explore other avenues to increase tax compliance.