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Bellco U.S. file summary judgment briefs in UBIT case
DENVER (6/30/09)--Bellco CU and the U.S. Department of Justice filed separate motions for summary judgment Friday in a U.S. District Court in Colorado in Bellco's challenge of the unrelated business income tax (UBIT) on three of its products. Bellco, a Greenwood Village, Colo.-based credit union, filed suit in May against the U.S. government over the Internal Revenue Service's interpretation of UBIT for three products--accidental death and disability insurance (AD&D), credit life and disability insurance, and financial services such as investments. The credit union is suing for a refund of $199,293 it paid in UBIT on the three products in 2000, 2001 and 2003, plus statutory interest. The judge may grant the summary judgment motions since both sides have indicated that there are no facts in dispute, which would bypass the need for a trial. The key legal issues discussed in the brief were whether sales of credit insurance and investment products were substantially related to the granting of loans and the promotion of thrift, and whether income from the sale of AD&D qualified as a royalty not subject to UBIT. The government's brief, filed by the U.S. Department of Justice, and Bellco's brief both center their arguments on whether the products in question were "substantially related" to the credit union's tax-exempt purposes of making loans at fair rates and promoting thrift. The government asserts that neither credit insurance nor financial services was substantially related to the exercise or performance of Bellco's tax-exempt purposes, and that the income from the sale of AD&D was not royalty income even though the credit union's insurance partner directly marketed and serviced the product. Both Bellco and the government had until last Friday to file their briefs moving for summary judgment. Each will have at least 10 days to respond to the other's brief.


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