#2021-27, September 8, 2021

MBA Opposes Proposed IRS Reporting Requirements in Letter to MA Delegation; Bankers Urged to Contact Congress

In a letter to the Massachusetts Congressional Delegation this week, the Association strongly opposed proposed new Internal Revenue Service reporting requirements that are under consideration in Congress.  The proposal mandates that banks collect and share account and transaction information on millions of customers with the IRS in an effort to increase tax compliance. 

The letter notes that, “the new reporting requirements…are extremely expansive, will be complicated and burdensome for the industry to implement, and would intrude into the lives of nearly every individual with a bank account.”  In addition, the Association stated that, “Smaller community banks, which comprise the vast majority of MBA’s membership, will be especially burdened by this mandate, which requires an expensive compliance effort to track and report inflows and outflows on all bank products.”

ACTION NEEDED: All member bankers are urged to contact Congress in opposition to the IRS reporting proposal, which is likely to be considered during debate on the budget reconciliation package in the coming days.  The American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) have sample letters to send to your Representatives and Senators.  In addition, ICBA has resources to share with your customers to encourage them to oppose this proposal as well.  To access the ABA resources, click here, to access the ICBA resources, click here.

To read MBA’s letter to the delegation, click here.

CFPB Releases Long-Anticipated Small Business Data Collection Proposal

This week, the Consumer Financial Protection Bureau (CFPB) released the long-awaited proposal for implementing Section 1071 of the Dodd-Frank Act, which mandates that lenders collect credit application data for small businesses, including women-owned and minority-owned small businesses. The more than 900-page proposed rule requires banks and other lenders to report: the amount and type of small business credit applied for and extended; the race, ethnicity and sex of the small business owners; and several key elements of the price of the credit offered.

The rule applies to all banks, credit unions and nonbank lenders that originate at least 25 credit transactions in each of the two preceding calendar years that meet the definition of “business credit” under Regulation B and that involve “small businesses”.  Under the proposed rule, “small businesses” are defined as businesses with $5 million or less in gross annual revenue for the business’ preceding fiscal year.  The proposed rule covers business and agricultural-purpose loans, lines of credit, credit cards and merchant cash advances.

Similar to Home Mortgage Disclosure Act (HMDA) data collection, banks would be required to collect data on a calendar-year basis and report it to the CFPB by June 1 of the following year.  The Bureau will make the data available annually to the public on its website, and the proposal seeks input on whether any information should be redacted from the public data set to protect privacy of small businesses.

The Association is reviewing the proposal and plans to submit comments to the CFPB.  Comments are due 90 days after the proposal is published in the Federal Register.

To read more and download the proposed rule, click here.