Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
League chides bankers for distorting UBIT lawsuit facts
PEWAUKEE, Wis. (1/23/08)--"There they go again, distorting the facts to promote their anti-consumer, tax-increase agenda." Brett Thompson, president/CEO of the Wisconsin Credit Union League, is referring to a press release from the Wisconsin Bankers Association (WBA) (see link). The release says Appleton, Wis.-based Community First CU's lawsuit against the Internal Revenue Service (IRS) for overpayment of taxes represents a larger attempt by Wisconsin credit unions to avoid paying taxes. "That's simply not true," says Thompson. "Wisconsin credit unions pay millions in taxes annually. The lawsuit isn't about money, but serving members." The lawsuit seeks a refund of $54,000 that IRS said the $916.2 million asset credit union owed, based on the sale of credit life and credit disability insurance and guaranteed auto protection (GAP) insurance. The lawsuit seeks a legal clarification about what may be subject to IRS' unrelated business income tax (UBIT) rule. The IRS erred in apply UBIT to these services because they are financial services that help mitigate losses to the credit union, enable it to grant loans and further credit unions' mission to serve members, Thompson says. The suit has the support of the league, the Credit Union National Association, CUNA Mutual Group and the National Association of State Credit Union Supervisors. They support the suit because it is essentially an effort based on principle, Thompson says. "Like all credit unions, Community First exists to offer financial products that contribute to the financial well-being of its member-owners. The services for which Community First paid the unrelated business income tax are in fact central to that mission--and to the mission of all credit unions who offer them," Thompson says. WBA misses the point, failing to address the UBIT issue entirely and instead continuing to refer to its own flawed, self-funded study of credit unions to push for a tax increase agenda. WBA's assertion that Wisconsin credit unions deny the state millions in tax revenue further jumps the tracks, said Thompson. The lawsuit, filed in the Eastern District Federal Court, is a federal tax issue--not a state tax issue--he said. Thompson noted that Wisconsin banks are in the hot seat on state taxes. More than 87 Wisconsin banks challenged the state Department of Revenue the past few years when the agency said they used subsidiaries with no purpose other than to avoid state taxes. Banks reached settlements with the agency. "Some of the state's largest banks paid no taxes at all," he said. "The WBA would do well to heed the adage to refrain from throwing stones when you live in a glass house."
Other Resources

RSS print
News Now LiveWire
Falling #gas prices: Pros, cons for U.S. economy #NewsNow #Market http://t.co/XWwwERwe7e
11 hours ago
Members of Interstate FCU have voted to merge with Credit Union of Southern California https://t.co/yYeSWEG4GH
14 hours ago
.@InfinityFCU has named Liz Hayes as president/CEO. Hayes was formerly EVP and chief administrative offficer at @Affinity_Plus
14 hours ago
.@wpcu battles Speedway in round 3 of Dayton Brand Madness via @DBJnews http://t.co/EbQL5f9be8
15 hours ago
New at #NewsNow: Fed regulators approve new #QRM rule. http://t.co/Bdz5q43xjZ
16 hours ago