NAFCU urges 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 135 million credit union members at risk is not the way to go.
Both the House and Senate included language in the FY 2022 budget resolution for the Build Back Better Act budget reconciliation package to allow this proposal. Lawmakers were considering a reporting 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 have required 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. The Inflation Reduction Act, which was signed into law in August 2022, did not contain this provision and the 118th Congress is not expected to take up any legislation including this proposal.
NAFCU-supported legislation was introduced in the 118th Congress in both the House, H.R. 1010, and Senate, S. 453, that would prohibit the IRS from taking action in this area.