DENVER and WASHINGTON (10/20/10)--The U.S. Department of Justice has abandoned its plans to appeal a federal judge’s favorable credit union ruling related to Bellco CU’s challenge of the Internal Revenue Service’s (IRS) policy toward unrelated business income tax (UBIT) and its application to credit unions. “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,” said Credit Union National Association (CUNA) President/CEO Bill Cheney. “Now we 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.” The government had filed a notice of intent to appeal this summer after Judge Christine M. Arguello ruled in November 2009 that investment and insurance products that Bellco sold to 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 purposes, and therefore the income from those activities was, under the law, exempt from UBIT. What this most recent action in the Bellco case means to the credit union is that the IRS must honor its agreement to pay the full tax refund of $199,293 sought by the credit union on three of its products. The UBIT Steering Committee, comprised of CUNA, the American Association of Credit Union Leagues, the National Association of State Credit Union Supervisors, and CUNA Mutual Group, while not giving tax advice, has suggested that the Bellco case may be helpful to state-chartered credit unions' legal, tax, and accounting professionals in determining whether the decision constitutes "substantial authority" for their credit union to not pay, or to seek a refund of, UBIT paid on income from sales of brokerage or annuities products.