Credit Unions Urges Rejection of Ways and Means Proposal

September 13, 2021

The Honorable Richard Neal
Chairman
House Ways and Means Committee
Washington, DC 20515

The Honorable Kevin Brady
Ranking Member
House Ways and Means Committee
Washington, DC 20515

Dear Chairman Neal and Ranking Member Brady:

On behalf of America's credit unions, I am writing regarding the Committee on Ways and Means' markup of the Build Better Act. The Credit Union National Association (CUNA) represents America's credit unions and their more than 120 million members.

The administration has proposed requiring depository institutions, including credit unions, to report additional account holder information for virtually every member and customer to the Internal Revenue Service in a much larger and more intrusive annual IRS Form 1099-INT. Under this proposal, banks, credit unions, and other entities would be required to annually report to the IRS the gross inflows and outflows of account holders (businesses and individuals) with a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner.

Credit unions are extremely concerned about and strongly oppose this proposal. While many entities are subject to IRS reporting requirements related to taxable events, this proposal would have credit unions reporting nontaxable activity to the federal government. This is frankly an invasion of credit union member privacy because this information cannot be directly used to ascertain a taxpayer's tax liability.

In addition to the personal privacy concerns that this proposal presents, we are also skeptical of the government's ability to keep this type of information secure. It is well known that the system the IRS uses to secure and analyze taxpayer information is decades old and vulnerable to data breach. Recent breaches of federal government systems, including a massive data breach at the federal Office of Personnel Management in 2014 or this year's IRS leak of federal tax returns of many wealthy Americans, raise legitimate questions regarding the government's ability to keep this new trove of personal data secure.

We also have concerns regarding the added regulatory burden this proposal would impose on credit unions. To comply with the requirements of this proposal, credit unions will have to hire firms to update software, train staff on new procedures, manage member complaints regarding the requirement to turn this information over to the government, and take other action. All of this will come at a cost to credit union members.

Finally, we are mindful that previous attempts that policy like this have been wrought with unintended consequences. For example, the Foreign Account Tax Compliance Act of 2010 placed similar burdensome reporting requirements on financial institutions. In response, many Americans overseas were unable to obtain or lost access to the banking system as many financial institutions were unwilling or unable to meet the requirements of that law. Before a proposal like this moves forward, it deserves a great deal more study and consideration.

On behalf of America's credit unions, we urge you to reject this proposal. Thank you for your consideration in this matter.

Sincerely,

Jim Nussle
President & CEO
Credit Union National Association
Washington, DC