FOR IMMEDIATE RELEASE
Contact: Patrick Keefe
CUNA Communications, 202-508-6765We learned this afternoon that the Department of Justice has DROPPED its appeal of a federal court ruling in favor of the Bellco Credit Union (in Greenwood Village, Colo.) and its challenge to federal tax collectors over unrelated business income tax (UBIT).
CUNA President and CEO Bill Cheney has just now sent the following message to credit unions:
"The Department of Justice has decided to withdraw its appeal of the Bellco Credit Union case.
"At issue is the district court ruling last November that the insurance and investment products Bellco sold its members, including credit life and disability insurance and some other products, stocks, bonds, mutual funds and annuities, were "substantially related" to Bellco's tax-exempt purpose that therefore income from those products was exempt from unrelated business income tax (UBIT). Income from sales of accidental death and dismemberment insurance marketed by a third party via Bellco's mailing lists were held to be exempt royalty income.
"The district court ruling was a victory for credit unions and a loss for the IRS. This past August, the Justice Department indicated it planned to appeal the district court's decision. But today we learned that the Justice Department has decided not to pursue the appeal and has withdrawn the notice of appeal it had filed with the U.S. Court of Appeals for the 10th Circuit.
"We consider this fantastic news because it means that the government did not see enough merit in its own position to push it further in the courts. Now CUNA and the other members of the UBIT Steering Committee (AACUL, CUNA Mutual and NASCUS) will be solidifying a strategy that will, we hope, put the UBIT issue to rest with the IRS and others for a long time to come."
Contact me for additional insights/quotes from CUNA General Counsel Eric Richard about this case.
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