President Joe Biden. (Source: Shutterstock)
After months of negotiations and adjustments to the proposed IRS reporting requirement for financial institutions, the White House confirmed on Thursday that the proposal had been dropped from the budget reconciliation framework.
Does that mean the issue is dead? No. It simply means that the Biden Administration has abandoned the issue for now.
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Once the removal was confirmed, credit union officials from NAFCU and CUNA released statements praising the grassroots campaign, which logged more than 785,000 messages to Congress from credit union leaders and advocates from around the nation who opposed the IRS reporting requirement.
CUNA President/CEO Jim Nussle said, "Credit unions and their members made their voices heard loud and clear over these past few months, and the result is a victory for all consumers. CUNA, Leagues and credit unions engaged Congress continuously during this process and showed them how this proposal would have hurt consumers, harmed financial inclusion efforts, and created serious data privacy concerns. This is a clear-cut example of our fierce, bold 360-degree advocacy in action."
NAFCU President/CEO Dan Berger said, "NAFCU commends the White House and congressional leaders from backing away from the invasive IRS reporting requirement proposal in the initial reconciliation framework released today. This is an important step in ensuring law-abiding Americans maintain their financial privacy. NAFCU has fought against this bad idea since it was first proposed, and we applaud all the credit unions and lawmakers who have joined us in fighting strongly against this new reporting regime. It is important that this provision be dropped outright from the final legislation. We remain vigilant in our opposition until the reconciliation process is complete."
To Berger's point, the IRS reporting requirement proposal, while abandoned by President Biden during this round of negotiations, could be reintroduced at any moment.
The temporary nail on the coffin for the proposal came Wednesday as 21 House Democrats wrote a letter to Speaker of the House Nancy Pelosi (D-Calif.) and House Ways and Means Committee Chairman Rep. Richard Neal (D-Mass.) to oppose the deal.
"While the intent of this proposal is to ensure all taxpayers meet their obligations — a goal we strongly share — the data that would be turned over to the IRS is overly broad and raises significant privacy concerns," the letter stated. "We have little information about how the IRS plans to protect or use this massive trove of data. Americans expect their bank or credit union to safeguard their financial information. This proposal would erode trust in financial services providers."
Less than 24 hours after the letter was sent, the proposal was removed.
Until Wednesday, the only lawmakers vocally opposed to the proposal were all Republican.
The last iteration of the proposed IRS reporting requirement would have required financial institutions to report inflows and outflows of personal and business accounts, as well as transfers between accounts of the same owner, if it is more than $10,000 per year. The initial proposal introduced in June had the threshold at $600 per year.
CUNA and NAFCU said they will continue watching the potential future developments of the issue.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
