Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
CUNA contacts IRS on tax revocations
WASHINGTON (5/22/12)--Concerned that another round of problems with the Internal Revenue Service's (IRS) "automatic revocation process" for federal credit unions' tax exemption is about to occur, the Credit Union National Association (CUNA) joined three other credit union groups in a bid to head off potential Form 990-T issues for credit unions.

In a letter from a law firm representing CUNA, the National Association of State Credit Union Supervisors (NASCUS), CUNA Mutual Group and the American Association of Credit Union Leagues (AACUL), the IRS was asked to confirm that steps are "being taken to prevent a significant re-occurrence of the automatic revocations for the federally-chartered credit unions filing the Form 990-T." The letter was sent by the law firm of Caplin and Drysdale, Washington, DC.

The issue arises from federal credit unions' claiming the health insurance premium tax credit. To do so, federal credit unions are required to file Form 990-T – even though, as federal credit unions, they are exempt from filing Form 990 itself.

The IRS requires Form 990 filers to disclose the names and compensation of certain key employees such as directors, their 20 highest compensated non-executive employees, any independent contractors that work for the firm, and former high ranking or key employees.

The filing of 990 forms apparently triggers a search by the IRS computer for past Form 990 filings. If none are found for the federal credit union, an exemption revocation letter is automatically sent to the credit union. "But federal credit unions are not required to file Form 990 and should not be receiving these letters," said CUNA General Counsel Eric Richard.

"It is vital that the tax agency address this issue as soon as possible, and keep such letters from going out," he added.

The IRS last year notified several state-chartered credit unions, and some federally chartered credit unions, that they would lose their tax-exempt status after their respective regulators failed to file Form 990 tax returns on their behalf.

May 15 marked the annual deadline for filing a new Form 990 for those organizations that are required to file it. "The concern is now that we will see a whole new round of erroneous revocation letters from the IRS to federal credit unions because of that filing deadline and the situation that federal credit unions find themselves in, at no fault of their own," Richard said.


RSS print
News Now LiveWire
.@TheNCUA :Low-income CUs can expand services to members, train staff,collaborate for efficiencies w/more than $1M in grants awarded 2day
8 hours ago
.@CUNA joins 11 other financial service orgs urging @SenateFloor to take up #CISA to strengthen cybersecurity information sharing
9 hours ago
.@RedwoodCU and its staff donated a combined $5,100 toward AIDS Walk San Francisco. The CU is a longtime sponsor of the event.
9 hours ago
See the latest from @CUNA's CompBlog on Customer Due Diligence. http://t.co/rzOzDUpNMT
10 hours ago
New #FinCEN proposal would strengthen, clarify due diligence obligations for financial institutions. http://t.co/2yxVUXCrYA
10 hours ago