Regulatory Compliance Update October 2019

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

We have reviewed the Compliance News for September 2019. Congress is back in session.

IRS – Has updated the list of countries that have information exchange agreements with the United States.  However, financial institutions may choose to report all countries.

IRS – Has updated the file layouts for 1098 forms (as well as others).  The 1042-S changes will be issued at a later date.

Transmitter “T” Record

  • Payment Year – positions 2 – 5 has been incremented to 2019.

Payer “A” Record

  • Payment Year – positions 2 – 5 has been incremented to 2019.
  • Type of Return – A new value “FP” has been added. This does not affect our systems.

Payee “B” Record

  • Payment Year – positions 2 – 5 has been incremented to 2019.
  • Form 1098
    • Mortgage Acquisition Date – A new field has been added in positions 723 – 730. This is the date of acquisition for a mortgage acquired during the reporting year. Fields 731 – 748 are blank.

FDIC – Has finalized the changes to the Recordkeeping for Timely Deposit Insurance Determination.  The new rules will require that the failed institution restrict access in every borrower’s deposit accounts.  The institution would also be required to produce a report of all credit balances in open-end loans and lines within 24 hours of failure. The compliance date for the new rules is April 1, 2020 with the option to extend the date by one year.

Significant Dates:

Payday Loans – A federal court in Austin, Texas has delayed the regulations until December 8, 2019 while the court reviews the rules. August 19, 2019 was the published effective date.

October 1, 2019 – Effective date of the FDIC final rules for recordkeeping for timely deposit insurance determination.  The rules also cover escrow accounts and overpayments of lines of credit and loans.

October 4, 2019 – Comments due on IRS reinstated for 1099-NEC (Nonemployee Compensation) that would take effect in tax year 2020.  Extended from September 30, 2019.

October 15, 2019 – Comments due on CFPB’s request for information on Regulation C (Home Mortgage Disclosure) that would address reporting thresholds for closed-end loans and incorporate previously issued interpretations.

October 15, 2019 – Comments due on CFPB’s request for information on Regulation C (Home Mortgage Disclosure) regarding changes to data points and requirements to report certain business or commercial purpose loans.

November 7, 2019 – Comments due on Federal Reserve’s plans to develop a new interbank faster payments system (“FedNow”).

Emerging Issues:

CECL Consumer Impact and Study Bill – Would delay implementation of the Financial Accounting Standards Board’s current expected credit loss standard until a quantitative impact study can be completed.

Continued Encouragement for Consumer Lending Act – Would also delay implementation of the Financial Accounting Standards Board’s current expected credit loss standard until a quantitative impact study can be completed.

Continuing Appropriations Act – Would extend the National Flood Insurance Program through November 21, 2019.

Credit Access Inclusion Act – This bill was introduced in the House.  It has been introduced in the Senate.  The Act would allow for reporting of certain positive consumer credit information to the credit bureaus.  The information would include performance under a lease agreement for a dwelling, utility and telecommunication payments.  The bill prohibits an energy-utility firm from reporting a consumer’s balance as late if the utility and consumer have entered into a payment plan agreement.

Financial Inclusion Banking Act – Would empower the CFPB to lead coordination within the Bureau and to work with other federal agencies in investigating strategies to improve participation in the traditional banking system.  The activities would include research, identifying best practices to increase participation and improving education.

IRA Preservation Act – Would reduce penalties for taxpayers who voluntarily correct IRA errors, would eliminate the 10% penalty on early distributions that are attributable to withdrawal of interest, would repeal the tax disqualification penalty for accounts where employees engage in certain prohibited transactions, would revise the statute of limitations on certain taxes, and would require the Treasury to expand the Employee Plans Compliance Resolution System to address inadvertent failures for which an IRA Owner was not at fault.

SAFE Banking Act – Would prohibit any federal banking regulator from penalizing an institution for providing banking services to a legitimate marijuana-related business.

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