WASHINGTON--Delivering the credit union perspective directly to the Internal Revenue Service (IRS) and the Department of the Treasury, America’s Credit Unions Head of Regulatory Advocacy James Akin testified Tuesday in a public hearing regarding the implementation of auto loan interest tax deductions in H.R. 1.
The hearing addressed the proposal created by the legislation that implements the temporary federal income tax deduction for interest on certain passenger vehicle loans for tax years 2025–2028.
“America's Credit Unions supports the statutory objective of providing targeted tax relief...[h]owever, without targeted refinements, the proposed rule risks imposing substantial implementation burdens on credit unions while creating uncertainty for borrowers attempting to claim the deduction.” Akin said.
Akin reiterated concerns America’s Credit Unions detailed in written comments filed earlier this month on the proposal, most notably that the proposal would require credit unions to determine whether a loan is covered by the statute, even though they may not have all the information needed to make the determination. Instead of placing this requirement on lenders, Akin stated that borrowers should be responsible for determining whether a vehicle loan qualifies.
Another significant concern raised is that the proposed exclusion of negative equity from qualifying indebtedness is unworkable for lenders and Akin urged the IRS to remove it entirely.
America’s Credit Unions said it will remain engaged with the IRS during the implementation process of H.R. 1’s auto loan interest deduction.