WASHINGTON—CUNA is urging credit unions to be vigilant for banker assaults on credit unions’ tax status as the deadline for individuals to file their personal income tax returns arrived this week.
“This is the time of year we when we anticipate that those who perhaps don’t agree with credit unions’ tax status might make some noise about that,” said CUNA Chief Advocacy Officer Ryan Donovan.
Donovan said that it is critical for all credit unions to remember why Congress continues to support the CU tax exemption.
“It’s important to remember that Congress has conveyed and continually reaffirmed the credit union tax status based on the structure of credit unions as not-for-profit cooperatives and their mission to promote thrift and to provide access to credit for provident purposes,” Donovan said.
Donovan noted that Washington’s position on the CU tax exemption is clear.
“As we saw through the consideration last year of comprehensive tax reform, Congress embraces credit unions’ mission,” he said. “There was not any consideration during the last tax act for changes to the tax status, and the reason that Congress embraces that mission and our structure is because every day credit unions earn their tax status through their service to their members—they provide an alternative to for-profit financial services providers, alternatives to abusive lenders and other financial services providers and are the original consumer protectors within the financial services marketplace.”
Despite Congress’ preservation of credit unions’ tax status during tax reform, bankers have been active in their attacks on credit unions. Iowa has been a focus.
As CUToday.info has reported, during a 90-minute public hearing in Des Moines last week on tax reform legislation before the Iowa legislature, representatives of banks and credit unions “skirmished over provisions that weren’t part of the proposal.”
Also, as CUToday.info reported, bankers in Iowa have launched an aggressive campaign in the state to require credit unions to pay the same 5% franchise tax they do. Credit unions in Iowa are already taxed on their reserves.
Banks have been sponsoring a multi-media campaign calling for an end to the “free ride” they say credit unions enjoy. Credit unions have responded by citing their member-owner status and stating they pose no threat to banks, which have 90% of the market share in Iowa. Newspapers across the state have been filled with letters to the editor arguing both sides of the issue.