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UBIT trial scheduled for next May
WASHINGTON (5/15/08)—Federal Judge William Griesbach has set May 11, 2009 as the trial date for a Wisconsin credit union’s challenge of an Internal Revenue Service (IRS) determination that certain insurance products fall outside the credit union’s main mission. The IRS ruled the products were therefore subject to unrelated business income taxes (UBIT). The suit was filed by state-chartered Appleton, Wis., Community First CU on Jan. 15. Community First is requesting a refund of about $54,000 in taxes paid in 2006 on income from several insurance products. The U.S. attorney’s office has asked that the suit be dismissed. In addition to setting a trial date, Judge Griesbach released a schedule for the conduct of discovery, which is to be completed by early December 2008. However, CUNA General Counsel Eric Richard noted that both the trial date, and its expected duration, are subject to change as events may dictate. For instance, he pointed out, it could be delayed by a contentious discovery process, which could cause the court to decide that additional time was needed to ensure a fair trial. The UBIT litigation has been widely hailed by credit unions. Notably, Community First CEO Cathie Tierney received a standing ovation from her peers at the Wisconsin CU League's annual Governmental Affairs Conference just 10 days after the credit union filed its lawsuit. Credit unions' support was displayed on an even larger scale when Tierney received an ovation by thousands of credit union representatives attending CUNA's Governmental Affairs Conference here earlier this month. The case is being followed by a coalition of credit union organizations, known as the UBIT Steering Committee that includes: CUNA; CUNA MUTUAL; American Association of Credit Union Leagues, and the National Association of State Credit Union Supervisors. Community First Credit Union has informed the steering committee that it expects the trial could last up to a week.


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