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Federal Reserve FAQs on longstanding regulations

The Federal Reserve Board has announced it has published frequently asked questions (FAQs) comprising existing legal interpretations related to a number of the Board's longstanding regulations. The FAQs are intended to increase transparency and enhance accessibility to Board and Board staff legal interpretations. The FAQs include legal interpretations that have been formulated over time in response to specific requests related to each regulation. Each set includes significant existing interpretations of the regulation, including those found in Board orders, letters to specific requestors, and other sources, as well as those not previously available in written form.

There are currently separate pages of FAQs for regulations H, K, L, O, W and Y. An FAQs table of contents provides a list of the FAQs with the date of their most recent update, and links to the individual FAQ pages.


Fed Board adopts final rule on use of supervisory guidance

The Federal Reserve Board has adopted a final rule outlining and confirming the use of supervisory guidance for regulated institutions. The final rule generally codifies a statement issued in September 2018 clarifying the differences between regulations and guidance and is substantially similar to the proposal issued last year. Unlike a law or regulation, supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance. Rather, guidance outlines expectations and priorities, or articulates views regarding appropriate practices for a specific subject. The rule will be effective 30 days after publication in the Federal Register and mirrors the rules issued earlier by the CFPB, the FDIC, the NCUA, and the OCC.


CFPB rescinds temporary flexibilities statements

The CFPB announced Wednesday that it is rescinding, effective today (April 1) seven policy statements issued last year that provided temporary flexibilities to financial institutions in consumer financial markets including mortgages, credit reporting, credit cards and prepaid cards. With the rescissions, the CFPB is providing notice that it intends to exercise the full scope of the supervisory and enforcement authority provided under the Dodd-Frank Act, to ensure the industry complies with consumer protection laws. The CFPB is also rescinding its 2018 bulletin on supervisory communications and replacing it with a revised bulletin describing its use of matters requiring attention (MRAs) to effectively convey supervisory expectations.

The rescissions of policy statements, which will be published in the Federal Register, include:

  • Rescission of the March 26, 2020, Statement on Bureau Supervisory and Enforcement Response to COVID-19 Pandemic.

    This rescission also withdraws the CFPB as a signatory to the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (April 7, 2020) and the Interagency Statement on Appraisals and Evaluations for Real Estate Related Financial Transactions Affected by the Coronavirus (April 14, 2020).

  • Rescission of the March 26, 2020, Statement on Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Home Mortgage Disclosure Act.

    This rescission also instructs all financial institutions required to file quarterly to do so beginning with their 2021 first quarter data, due on or before May 31, 2021, for all covered loans and applications with a final action taken date between January 1 and March 31, 2021.

  • Rescission of the March 26, 2020, Statement on Supervisory and Enforcement Practices Regarding CFPB Information Collections for Credit Card and Prepaid Account Issuers.

    This rescission also provides guidance as to how entities should now meet the specified information collections requirements relating to credit card and prepaid accounts.

  • Rescission of the April 1, 2020, Statement on Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act.

    This rescission leaves intact the section entitled “Furnishing Consumer Information Impacted by COVID-19” which articulates the CFPB’s support for furnishers’ voluntary efforts to provide payment relief and that the CFPB does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflect the payment relief measures they are employing.

  • Rescission of the April 27, 2020, Statement on Supervisory and Enforcement Practices Regarding Certain Filing Requirements Under the Interstate Land Sales Full Disclosure Act (ILSA) and Regulation J.

    The rescission instructs land developers subject to ILSA and Regulation J to resume filing of annual reports of activity and financial statements as specified in Regulation J.

  • Rescission of the May 13, 2020, Statement on Supervisory and Enforcement Practices Regarding Regulation Z Billing Error Resolution Timeframes in Light of the COVID-19 Pandemic
  • Rescission of the June 3, 2020, Statement on Supervisory and Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic
  • CFPB Bulletin 2021-01, which rescinds and replaces Bulletin 2018-01 (Changes to Types of Supervisory Communications).

    Bulletin 2021-01 announces changes to how CFPB examiners articulate supervisory expectations. It states that the CFPB will continue to rely on MRAs, explains the circumstances under which it will do so, and announces that the CFPB will discontinue use of Supervisory Recommendations.


Student emergency COVID aid not taxable

The IRS announced yesterday it has issued frequently asked questions on how students and higher education institutions should report pandemic-related emergency financial aid grants.

Students: Emergency financial aid grants made by a federal agency, state, Indian tribe, higher education institution or scholarship-granting organization (including a tribal organization) to a student because of an event related to the COVID-19 pandemic are not included in the student's gross income.

Also, students should not reduce an amount of qualified tuition and related expenses by the amount of an emergency financial aid grant. If students used any portion of the grants to pay for qualified tuition and related expenses on or before December 31, 2020, they may be eligible to claim a tuition and fees deduction or the American Opportunity Credit or Lifetime Learning Credit on their 2020 tax return. The tuition and fees deduction is not available for tax years beginning after December 31, 2020. Additional information on these credits and the tuition and fees deduction can be found in IRS Publication 970, Tax Benefits for Education.

Higher Education Institutions: Because students don't include emergency financial aid grants in their gross income, higher education institutions are not required to file or furnish Forms 1099-MISC reporting the grants made available by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) or the COVID-related Tax Relief Act (COVID Relief Act) and do not need to report the grants in Box 5 of Form 1098-T.

But any amounts that qualify for the tuition and fees deduction or the American Opportunity Credit or Lifetime Learning Credit are considered "qualified tuition and related expenses" and trigger the reporting requirements of Internal Revenue Code section 6050S. Higher education institutions must include qualified tuition and related expenses paid by emergency financial aid grants awarded to students in Box 1 of Form 1098-T.


Whistleblower awarded over $500,000

The Securities and Exchange Commission (SEC) has awarded more than $500,000 to a whistleblower who raised concerns internally before submitting a tip to the Commission. The whistleblower's information and assistance allowed the Commission and another agency to quickly file actions, shutting down an ongoing fraudulent scheme. The whistleblower's information prompted an internal investigation by the company, which then reported to an outside agency, which in turn provided the information to the SEC. Separately, the whistleblower also reported to the SEC within 120 days of reporting the violations internally to the company. Under the "safe harbor" provision of the SEC's whistleblower rules, the SEC treats the whistleblower's information as though it had been submitted to the SEC at the same time it was internally reported as long as the whistleblower also reports the information to the SEC within 120 days of the internal report.


IRS clarifies tax deadline changes

The IRS has issued a news release to clarify its extension of certain taxpayer deadlines from April 15 to May 17, 2021. In addition to postponing to May 17 the deadline for individuals to file their tax returns and pay any tax due for calendar year 2020, the IRS action:

  • Moved to May 17 the deadline for tax year 2020 contributions to IRAs and health savings accounts (which are tied to the tax filing deadline). Also affected are contributions to Archer Medical Savings Accounts and Coverdell education savings accounts.
  • Delayed to May 17 the time for reporting and payment of the 10% additional tax on amounts includible in gross income from 2020 distributions from IRAs or workplace-based retirement plans.
  • Postpones the due date for Form 5498 series returns to June 30, 2021.
  • Extended to May 17, 2021, the deadline for claiming a refund on tax year 2017 income tax returns
  • Delayed the application deadline for tax preparers interested in voluntarily participating in the Annual Filing Season Program for calendar 2021 until May 17, 2021.

The normal April 15, 2021, due date for estimated tax payments for tax year 2021 was not changed. And, as noted in earlier IRS notice, the change to federal tax due dates does not affect state tax filing or payment due dates unless a state's due dates are tied by law to the federal deadlines or a state acts to change its due dates. Also not affected by these federal tax date changes are the previously announced postponements to June 15 for individual and business taxpayers in Texas, Louisiana and Oklahoma impacted by winter storms.


FinCEN Innovation Hours report

The Financial Crimes Enforcement Network (FinCEN) has issued a report on its Innovation Hours Program, a key element of FinCEN’s broader Innovation Initiative. The FinCEN Innovation Initiative is a multilayered approach promoting responsible financial services innovation to further the purposes of the Bank Secrecy Act (BSA), as amended by the Anti-Money Laundering Act of 2020.


CFPB Consumer Response Annual Report for 2020

The CFPB has provided its Consumer Response Annual Report for 2020 to Congress. The impact of the COVID-19 pandemic on the consumer financial marketplace is reflected in the increase of complaints submitted to the CFPB. The CFPB handled approximately 542,300 complaints last year—a nearly 54% increase over the approximately 352,400 complaints handled in 2019. The report reflects issues consumers reported to the CFPB in 2020 as influenced by numerous factors including changing market conditions. The report includes analyses of complaints across multiple consumer financial products and services.

  • Credit and consumer reporting complaints accounted for more than 58% of complaints received, followed by debt collection (15%), credit card (7%), checking or savings (6%), and mortgage complaints (5%).
  • Beginning in April 2020, consumers began to submit more than 3,000 complaints mentioning coronavirus keywords nearly every month. Consumers submitted approximately 32,100 complaints mentioning coronavirus or related keywords in 2020. Absence of coronavirus as a keyword in a complaint does not necessarily mean the complaint was not related to the financial impact of the pandemic.
  • Consumers from Florida submitted more complaints per capita than consumers from any other state (309 complaints submitted per 100,000 in population).
  • The CFPB received 40,800 complaints from self-identified servicemembers, veterans, and military families.


$50M in University of Phoenix refunds sent to students

The FTC has announced it is sending payments totaling nearly $50 million to more than 147,000 University of Phoenix students who may have been lured by allegedly deceptive advertisements. The refunds stem from a lawsuit the FTC filed against the school alleging that it used deceptive advertisements that falsely touted its relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and the American Red Cross. The FTC also alleged that the university's advertising gave the false impression that the online school worked with those companies to create job opportunities for its students and tailor its curriculum for such jobs.


California housing providers resolve discrimination claim

HUD has announced it has approved a conciliation agreement between Monterey, California-based rental property owners and managers G Davi Properties and Guido A. Davi II and a resident of one of their properties, resolving claims that the providers denied the resident’s reasonable accommodation request to keep an assistance animal.


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