IRS Adds to Compliance Burden for CUs Posted by AVCU on 11:39 AM

Changes to the Internal IRS’ 1042-S reporting requirements will create a new compliance burden for credit unions, CUNA Deputy General Counsel Mary Mitchell Dunn has warned. The IRS this month approved new tax reporting requirements that will impact credit unions, banks, savings institutions, securities brokerages, and insurance companies that pay interest on deposits. Under the IRS rule, credit unions and other financial institutions will be required to report on their forms 1042-S interest of $10 or more earned annually on deposit accounts held by non-resident aliens who are residents of any foreign country. The current non-resident reporting requirement only applies to Canadian expatriates. The IRS rule change is an attempt to combat tax evasion. Dunn said some credit unions may not have the data processing abilities needed to identify affected accounts and prepare the required IRS forms. The costs that the rule change creates for financial institutions and consumers seems to far outweigh any benefit to the IRS. Read the IRS release.