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News Now

Washington
NCUA underscores importance of CU tax status
ALEXANDRIA, Va. (12/1/10)—The head of the National Credit Union Administration (NCUA) underscored the importance of the existing tax status of federal credit unions, saying its loss would have a “tangible and negative effect” on the safety and soundness of credit unions. NCUA Chairman Debbie Matz, in a Nov. 22 letter, was responding to a communication from Credit Union National Association (CUNA) President/CEO Bill Cheney regarding a recent report by the National Commission on Fiscal Responsibility regarding possible changes in the country’s tax code. The Commission’s draft report on deficit reduction options named tax expenditures as one way that the country's debt could be cut. While this could conceivably bring about debate on the credit union tax exemption, credit unions are not specifically cited in the report. In her letter, Matz said as chief regulator of federal credit unions her concerns about any repeal of the federal tax exemption extend also to the very existence of credit unions as they are known today. “Not only would there be a tangible and negative effect on the safety and soundness of credit unions, but I also believe such a change would necessitate a significant re-examination of the not-for-profit cooperative business model currently employed by credit unions,” Matz wrote. While deeply concerned about the commission’s tax report, CUNA has emphasized that the suggestions contained within its report are in the very earliest stages of recommendation and have a long road ahead before any are made policy. The commission released its recommendations today and is expected to vote on them on Friday.


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