WASHINGTON–Requiring credit unions to file additional tax forms would "impose increased regulatory burden on the credit union system" and also "contravene directives from President Trump and the U.S. Department of the Treasury to achieve regulatory reform and rollback throughout the financial system," argued NAFCU in a letter to the IRS Tuesday.
The trade association also made those same points Tuesday in a personal visit to the office of Sen. Orrin Hatch (R-UT).
The letter to IRS Acting Commissioner David Kautter was in response to a letter sent by Senate Finance Committee Chair Hatch suggesting that the largest credit unions should file Form 990 information returns to the tax agency.
CUNA responded to Hatch's letter, sending their own letter to the senator Tuesday.
NAFCU Says IRS Forms Won't Materially Increase Transparency
NAFCU discussed with Hatch's office why credit unions should not have additional compliance burdens placed on them.
"Although NAFCU and our members support transparency, requiring credit unions to file additional paperwork is unlikely to increase transparency in a material manner and would only serve to increase the already staggering regulatory burden imposed on credit unions," wrote NAFCU President and CEO Dan Berger in the letter to the IRS. "Furthermore, all credit unions, regardless of size, continue to fulfill their core mission to provide their members with high-quality, affordable, and accessible financial products and services."
Berger noted that the IRS already excludes credit unions from some other reporting requirements, and requested that the agency "continue to recognize the importance of credit unions in the nation's financial system and avoid increasing the regulatory burden on credit unions."
Hatch in January sent a letter to the NCUA questioning the credit union industry's federal tax exemption and recent field of membership changes. NCUA Chair J. Mark McWatters' response, sent in March but just made public Monday, defended credit unions' tax status and explained how eliminating the exemption could create safety and soundness issues not only for the industry, but the U.S. economy as a whole.
Following the Hatch letter to McWatters in January, NAFCU and CUNA defended credit unions' federal tax exemption and the benefits it provides to the nation's economy, as well as the NCUA's role as a strong, independent and transparent regulator.
CUNA's Response
“The asset size of a credit union and the products and services offered should not be factors in regulating one credit union more than another,” wrote CUNA President/CEO Jim Nussle in a letter to Hatch. “Some of the largest credit unions in the world serve primarily veterans, members of the U.S. military, and their families. Credit union products and services have evolved over time as the nature of the financial marketplace has evolved.”
Unlike many other tax-exempt organizations, federally insured credit unions are regulated and examined by federal agencies, noted Nussle.
"The National Credit Union Administration regulates and examines all federally chartered credit unions and the Consumer Financial Protection Bureau provides additional regulation for all credit unions and also conducts examination for all credit unions with assets in excess of $10 billion," wrote Nussle. "Therefore, there is no question that credit unions are complying with their tax-exempt purpose, as determined by the Congress in the Federal Credit Union Act. This makes such additional disclosure unnecessary.
"All federally insured credit unions file extensive quarterly call reports that are publicly available on the NCUA’s website," continued Nussle. "If an examiner believes that an expense category is out of line, he will undoubtedly make an inquiry. If an examiner finds that a credit union is suffering from overall operational problems, he will require the board of directors to take action."