WASHINGTON (6/2/08)--Proposed changes to instructions for filing an Internal Revenue Service (IRS) form that reports the pay of executives at state chartered credit unions will result in filers reporting “inflated figures” that do not reflect true compensation, the Credit Union National Association (CUNA) told the tax-collecting agency in a comment letter. CUNA was commenting on the IRS draft instructions and schedules to the redesigned Form 990, “Return of Organization Exempt from Income Tax,” which also includes reporting of the compensation of executive staff. Only state-chartered credit unions must file the forms; federal credit unions are exempt. In noting that the proposed instructions would result in inflated compensation figures for executives, CUNA suggested that nontaxable expense reimbursements and fringe benefits should not be included as “compensation.” Additionally, CUNA suggested setting compensation thresholds that are adjusted geographically to reflect differences in cost of living. CUNA also stated that the threshold for reporting compensation for employees other than executives is too low, and would inaccurately include employees without “sufficient authority or control in the workplace.” In other comments, CUNA suggested:
* “Central organizations” should be allowed to aggregate compensation information from subordinate groups; * The requirement to itemize specific data on group returns is unnecessary; * Providing a notice of change of the method of filing to the IRS on group returns should be sufficient, rather than seeking agency consent; * The definition of “key employee” is too broad, and could result in unintentionally including compensation information of such personnel as department heads, middle managers and others who lack responsibilities, power or influence of “key employees.”
Access the complete text of CUNA’s comment letter using the link below.