SDBA eNews

September 9, 2021

SDBA Asks Bankers to Urge Lawmakers to Oppose IRS Reporting Proposal

The SDBA is calling on bankers to contact Sen. John Thune, Sen. Mike Rounds and Congressman Dusty Johnson and express opposition to new reporting requirements for banks to track and report customer accounts and financial transactions to the IRS.  

The U.S. Senate will reconvene next week, and it is anticipated that lawmakers will develop details of the proposed $3.5 billion social spending infrastructure plan, which would have far-reaching tax reporting requirements including reporting bank account inflows and outflows to the IRS by banks. While this may do little to add revenue, it would come at a massive cost to the banking industry—and it would also heighten consumer concerns about the privacy of their banking relationships. 

"The new reporting requirements would raise questions about customers’ right to privacy, create unnecessary and expensive burdens for banks, and raise the cost of tax preparation for small businesses," said SDBA President Karlton Adam. "While all banks would be affected, small community banks with limited internal resources will be especially burdened by this new requirement." 

Bankers can take action directly by using the ABA's Secure American Opportunity grassroots platform, which is the preferred and quickest method to weigh in on important matters such as this one. Take action now

Proposed IRS Reporting Change Could Undermine Financial Inclusion Efforts 

In a letter to House and Senate lawmakers overseeing the Internal Revenue Service, ABA reiterated its opposition to proposed new tax reporting requirements on banks that would require them to report information on account flows on every account above a de minimis threshold of $600, including earnings from investment and business activity. President Biden’s American Families Plan floated such a measure as a way to shrink the so-called “tax gap.”

ABA flagged several significant consequences for individual and business taxpayers if these requirements were to be enacted. Specifically, the proposal raises significant data privacy and data security concerns and could lead to increased tax preparation costs for small business owners and sole proprietors, the Association said. It could also have a negative effect on the industry’s efforts to promote financial inclusion. “As some interpret this information reporting proposal effectively to require banks to police and report on the accounts of customers, we are very concerned that it will undermine trust in the banking system and erode the progress we have made reducing the number of unbanked and underbanked in the country,” ABA said.

Banks already report a significant amount of information to the IRS that is not being used, ABA added. The additional reporting requirements would be “massive, unmanageable and of questionable relevance to the calculation of taxable income,” and would create a significant compliance burden for the nation’s community banks. Read the letterTake action now

ABA Refreshes Credit Union Campaign

ABA’s campaign to educate the public about credit unions and their tax status has been rebranded as Reform Credit Unions. The campaign was updated to further emphasize the need to take action and demand reform to the laws and regulations related to credit unions.

The Association on Tuesday debuted a new website for the campaign that includes recent news and insights on credit union activity as well as resources to help bankers reach out to their member of Congress and voice their opinion.

The campaign website also includes information about the cost of credit unions to taxpayers, their lack of accountability, how credit unions have abandoned their mission of helping at-risk communities and their tax advantages that fuels bank acquisitions. Visit the site.

OCC Formally Proposes to Rescind 2020 CRA Rules

As expected, the OCC on Wednesday formally proposed to rescind the OCC’s 2020 Community Reinvestment Act rule with rules based on the 1995 CRA rules that were jointly adopted by the OCC, Federal Reserve and FDIC. Acting Comptroller of the Currency Michael Hsu earlier this summer signaled that he would rescind the 2020 changes and pursue a joint rulemaking to modernize the CRA with the other banking agencies.

“The issuance of the OCC’s NPR today is an important step toward strengthening and modernizing the CRA,” Hsu said. “The OCC is committed to working with the Federal Reserve and FDIC on a future joint rulemaking to develop a consistent framework across all banks that encourages higher levels of responsible lending, investments, services and greater community engagement, particularly focused on helping to meet the needs of low- and moderate-income and other underserved communities across the nation.”

Comments on the proposal will be due by Oct. 29. ABA has long advocated for a consistent approach to CRA modernization and will continue to work constructively with the agencies as they pursue a joint rulemaking in the days ahead. Read more. For more information, contact ABA’s Krista Shonk.

ABA, Telecom Groups Issue Best Practices for Blocked Outbound Calls

ABA and a group of telecommunication firms have issued a set of best practices to help banks when an outbound phone number is blocked or mislabeled as “spam” or “fraud.”

The telecommunication groups—which include AT&T, Verizon and other voice service providers—committed to resolve 95% of mislabeled calling numbers and blocked calls within two business days. For requests that cannot be resolved within two business days, voice service providers and their third-party analytics engines will keep the bank or other call originator “reasonably apprised of status and updates.”

The best practices build upon recent action by the Federal Communications Commission that helps to ensure banks can remedy mislabeled calling numbers or erroneously blocked outbound calls. At ABA’s urging, last December the FCC required voice service providers to notify the caller immediately when its call has been blocked and to provide a status update within 24 hours when a caller complains of a blocked call. Read the best practices. For more information, contact ABA’s Jonathan Thessin.

Advertising Available in 2022 South Dakota Bank Directory

The SDBA is currently offering advertising in its 2022 South Dakota Bank Directory. The directory is an indispensable reference tool for financial executives and those conducing business with financial decision makers in South Dakota. It reaches all South Dakota banks, branches, associate members and other financial industry leaders.

A limited number of full-color ads are available on the directory's tabbed divider pages. Full-page and half-page black-and-white ads are also available in the front section of the directory. The deadline to place an ad is Friday, Oct. 1, 2021. Learn more and place an ad.

Bankers, Industry Experts to Discuss Cannabis Banking at Upcoming Webinar

ABA VP Tanner Daniel will join a panel of bank regulators and industry experts in a webinar on cannabis banking issues on Tuesday, Sept. 21 at 1 p.m. CDT. The webinar—hosted by Brennan Manna Diamond and co-sponsored by the Arizona and Colorado Bankers Associations and the Ohio Bankers League—will include banker perspective on offering cannabis banking service and address FinCEN guidance both deposits and lending, electronic payment systems, and legislative or regulatory changes that would promote bank participation in the cannabis industry. Learn more and register.

Registration Open for SDBA's 2021 Annual Security Seminar

The SDBA will hold its 2021 Annual Security Seminar on Oct. 6 at the Hilton Garden Inn—Sioux Falls Downtown in Sioux Falls. This well-rounded seminar focuses on a range of issues of concern to security officers, facility personnel and management. 

Using current trends and examples, a variety of topics will be covered: workplace violence prevention: guideline for the employer, security blunders: show and tell, national update, interviewing techniques for the security officer and observation vs. perception.

Seminar instructors are Barry Thompson, who will be presenting virtually, and Branch Walton, who will be presenting in person. Learn more and register

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Question of the Week

Question: Regarding business day for the purposes of determining the right of rescission (ROR). If a loan closed Friday, July 2, 2021, you would count Saturday, July 3, Monday, July 5, and Tuesday, July 6, as a business day and disburse funds on Wednesday, July 7? Regulation Z talks about if a federal legal holiday falls on Saturday and they observe Friday, to count Friday as a business day. Would this be the same for Sunday, as well? July 4 was on a Sunday, therefore, we will count July 5 as a business day for ROR?

Answer: Conservatively, that is correct. The regulation points out when a federal holiday falls on a Saturday and the observed day is a Friday, you would count Friday as a business day for ROR purposes. We would also interpret this to extend to a situation where a holiday falls on a Sunday and the observed day falls on a Monday. Therefore, here, July 5, would still be counted as a business day for rescission purposes.

Rule for rescission, disclosures for certain mortgage transactions, and private education loans. A more precise rule for what is a business day (all calendar days except Sundays and the Federal legal holidays specified in 5 U.S.C. 6103(a)) applies when the right of rescission, the receipt of disclosures for certain dwelling- or real estate-secured mortgage transactions under §§ 1026.19(a)(1)(ii), 1026.19(a)(2), 1026.19(e)(1)(iii)(B), 1026.19(e)(1)(iv), 1026.19(e)(2)(i)(A), 1026.19(e)(4)(ii), 1026.19(f)(1)(ii), 1026.19(f)(1)(iii), 1026.20(e)(5), 1026.31(c), or the receipt of disclosures for private education loans under § 1026.46(d)(4) is involved. Four Federal legal holidays are identified in 5 U.S.C. 6103(a) by a specific date: New Year's Day, January 1; Independence Day, July 4; Veterans Day, November 11; and Christmas Day, December 25. When one of these holidays (July 4, for example) falls on a Saturday, Federal offices and other entities might observe the holiday on the preceding Friday (July 3). In cases where the more precise rule applies, the observed holiday (in the example, July 3) is a business day. Regulation Z, § 1026.2(a)(6), Comment 2,

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Contact Alisa Bousa, SDBA, at 605.224.1653 or via email.