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News Now

Washington
CUNA addressing IRS CU exemption error
WASHINGTON (9/16/11)—An assertion by the U.S. Internal Revenue Service (IRS) that some credit unions are no longer tax-exempt is “completely wrong” and something that the Credit Union National Association (CUNA) will work on tirelessly to set the record straight, inside and outside the credit union movement, CUNA President/CEO Bill Cheney said Thursday. Cheney was reacting to recent action by the tax agency in which it notified several state-chartered credit unions, and some federally chartered credit unions, that they would lose their tax-exempt status after their respective regulators failed to file Form 990 tax returns on their behalf. Various state credit union regulators at one time filed Form 990 tax returns for all state-chartered credit unions under their jurisdiction, but that practice was stopped years ago. CUNA in a letter to IRS Commissioner Douglas Shulman and Director of Exempt Organizations Lois Lerner reminded the IRS officials that state-chartered credit unions, which now file their own returns, have met their annual filing requirements and should remain exempt. CUNA in the letter also emphasized that organizations that are tax exempt under Section 501(c)(1) of the Internal Revenue Code, such as federal credit unions, do not have to file 990 forms or make those forms available for inspection. Cheney said CUNA hopes the IRS issue “is simply a paperwork error.” However, he added, “if it’s not a paperwork error – and we are looking into this – we will not rest until this effort is ceased, its origins exposed, and the tax agency understands thoroughly that the credit union tax exemption comes from Congress and the individual charters of credit unions, not from the IRS.” CUNA General Counsel Eric Richard added that CUNA’s Regulatory Affairs staff “is on top of this development and pushing the IRS to correct its error as soon as possible.”


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