WASHINGTON Lawmakers included a measure that will impose new mortgage reporting requirements on banks and servicers as part of a short-term highway funding bill passed this week by both chambers of Congress.
The provision is designed to provide the Internal Revenue Service with additional information to reduce inaccurate reporting and detect fraud related to mortgage interest deduction filings. President Obama is expected to sign the three-month highway funding bill soon.
The provision requires the reporting of the origination date of a mortgage, the property address for the collateral and outstanding balance on the loan at the beginning of the tax year. It is estimated it will raise an additional $1.8 billion for the government over 10 years.
Joe Pigg, a senior vice president at the American Bankers Association, said he expects the IRS will revise the current Mortgage Interest Statement Form 1098 to incorporate the new reporting elements. "But that is up to the IRS to decide," he said.
The new reporting elements go into effect for tax year 2017 so lenders and servicers don't have to report the new data elements to the borrower and IRS until January 2018.
The National Association of Federal Credit Unions said it will urge lawmakers to repeal the provision before the new IRS reporting requirements take effect.
The three-month extension buys Congress time to work on a long-term highway funding bill when Congress returns from its August recess.