Action Alert: IRS Tax Reporting Provisions
The House Ways and Means Committee has unofficially scheduled a markup this week and next on a new IRS Reporting Requirement impacting credit unions. In an effort to increase taxpayer compliance, the proposal will require credit unions and other financial institutions to report additional account holder information in an enhanced annual IRS Form 1099-INT.
Credit unions and other entities will be required to annually report to the IRS the gross inflows and outflows of account holders, both businesses and individuals, with a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner. The requirements will apply to savings, transactional, loan, and investment accounts. A de minimis exception would exempt accounts with gross flow threshold of $600. Payment settlement entities will also be required to collect Taxpayer Identification Numbers and file a revised IRS Form 1099-K expanded to all payee accounts, reporting not only gross receipts but also gross purchases.
The impact of these new reporting requirements on credit unions pose concerns, particularly in regards to privacy and data security. The impact on credit unions large and small in consideration of expected increased costs from software upgrades and staff training could be significant. Additionally, it remains unclear how comingled business and individual accounts, as well as jointly held accounts, will be treated under the proposal.
CUNA has issued an Action Alert for credit unions to urge legislators to reject the inclusion of these new IRS reporting provisions in the upcoming infrastructure reconciliation bill, available HERE. Additional information on the proposal is available HERE.« RETURN TO ALL NEWS