More than 100 business associations are calling upon Congress to reject the new tax reporting requirements proposed by the Internal Revenue Service (IRS).
The proposal would require financial services providers to track and submit to the IRS data on the inflows and outflows of every account above a threshold of $600. While the intent is to target wealthy tax dodgers, the business groups say the proposal is overly broad and will impact small businesses and individuals.
“These new proposed exceptions only add significant operational complexity for financial institutions and will not materially reduce the tens of millions of American taxpayers who would be captured by the new reporting regime,” the group of association wrote to House Speaker Rep. Nancy Pelosi (D-CA) and Minority Leader Rep. Kevin McCarthy (R-CA).
The letter was signed by various groups, including the National Association of Federally-Insured Credit Unions (NAFCU) and the Credit Union National Association (CUNA). The group says the new proposal would create significant operational and reputational challenges for financial institutions, increase tax preparation costs for individuals and small businesses, and create financial privacy concerns for consumers.
“The privacy concerns for Americans are real and should not be taken lightly. The IRS is not impervious to being hacked and has suffered massive data breaches in the recent past where the personal information of taxpayers was stolen. According to the Treasury Department, they only plan to use the data to increase the audits for those who make over $400,000 a year.1 The likely question of any American taxpayer making less than that is: Why does the IRS need my account information if they aren’t going to use it?” they wrote.
NAFCU has consistently urged Congress to reject the provision since it was included in the Administration’s budget proposal. The association encourages credit unions to engage with lawmakers on this issue to warn them of the impact on financial institutions. In addition, nearly 500,000 messages have been sent by credit unions and stakeholders about their concerns using CUNA’s Grassroots Action Center.
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