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Changes to Form 990 rule could cut reg burden CUNA

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WASHINGTON (8/2/11)--The Credit Union National Association (CUNA) has urged the Internal Revenue Service to consider a number of options for reducing credit unions’ compliance burden under IRS Form 990. State-chartered credit unions are required to file Form 990 with the IRS annually, although a few states still permit group 990 filings. Federal credit unions are not required to file, since they are not subject to unrelated business income taxes. 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. However, the reporting thresholds for these positions differ somewhat from position to position. In a comment letter, CUNA suggested that the IRS increase the Form 990 reporting threshold for former directors that received over $10,000 in compensation for their services to $100,000. The $10,000 reporting threshold “is much too low,” and complying with this threshold can strain the often limited resources of smaller credit unions and create a recordkeeping burden for those institutions, CUNA added. The IRS could also consider lowering the number of high-earning, non-director employees that would be covered under Form 990 reporting from 20 to five. Reports detailing the compensation of these and other “key” former employees should also be limited to data from the last two years, rather than the previous five years, CUNA added. CUNA also asked the IRS to consider developing separate Form 990s, one for 501(c)(3) tax-exempt organizations and one for all other tax-exempt organizations under 501(c) of the Internal Revenue Code. For the full comment letter, use the resource link.

Corporates announce NCUA prepay participation

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WASHINGTON (8/2/11)—As the National Credit Union Administration (NCUA) tallies credit union pledges to its voluntary Corporate Stabilization Fund assessment prepayment plan, two corporate credit unions announced their involvement in the program Monday. Volunteer Corporate CU (VolCorp), of Nashville, Tenn., announced that it plans to contribute 48 basis points (bp), the maximum amount permitted by the NCUA, into the prepayment plan. The credit union’s contribution would total $221,392. The NCUA has said it would move forward with the prepayment plan if credit unions pledge a total of $500 million. In the VolCorp announcement, CEO Rick Veach said that the payment “is one tangible way we can not only reduce our members’ expense, but also help with the financial burden of the Corporate Stabilization Fund for all credit unions.” In Columbus, Ohio's, Corporate One FCU President/CEO Lee Butke echoed those comments, saying that his board of directors "was resolute in the fact that since Corporate One is in a strong financial condition, we should absolutely do what we can to help our member credit unions manage their 2011 and 2012 assessments, especially at a time when so many are experiencing challenging economic times." Butke added that the credit union supports the NCUA’s efforts to help credit unions better manage these assessments, and is "proud" to help the agency smooth out those costs. The deadline for NCUA prepayment plan applications was Friday, and the agency said it would tally the total amount of credit union commitments by Aug. 9, If it moves forward with the plan, the NCUA will debit the pro-rated amounts that have been pledged from credit union accounts on Aug. 18. The prepayment plan could reduce the 2011 regular assessment from about 25 bp to about 18.5 bp. The NCUA is expected to set its 2011 Temporary Corporate Credit Union Stabilization Fund assessment at an Aug. 29 meeting.

As debt bill moves CUNA vigilant on tax status

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WASHINGTON (8/2/11)--The compromise debt ceiling bill expected to clear Congress before Tuesday’s default deadline would lift the debt ceiling by $2.4 trillion and would a create Congressional Joint Select Committee on Deficit Reduction to identify future debt-reduction measures. To date, the credit union tax exemption has not been a focus of the formal debt ceiling talks. President Barack Obama and congressional leaders worked out the debt deal over the weekend. According to the Congressional Budget Office, the plan would cut $2.1 trillion in spending between 2012 and 2021. The plan would cut discretionary spending until 2021. A House vote Monday night of 269-161 sends the package on to the Senate for a vote. Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said that CUNA will closely follow events surrounding the deficit reduction committee and continue to emphasize the positive impact that the credit unions have on the members and communities that they serve. Donovan predicted that debate will ensue over whether the Joint Committee has the ability to look at tax expenditures as part of its role. He also reminded that Speaker of the House John Boehner, of Ohio, has said there is “no appetite” among House lawmakers to look at increasing tax revenues. “We’ll keep a close eye on this and will engage with the Joint Committee as appropriate,” Donovan said, and added that “preserving the credit union tax status is absolutely the most critical issue CUNA works on.” While the debt ceiling debate continues to keep Washington’s attention, several hearings are also scheduled to take place this week. Hearings schedules always can be subject to change. However, after the drawn out debate on the debt ceiling, it should be noted that hearings may be postponed if Congress leaves town, as expected, after the vote. The Senate Banking Committee on Tuesday is scheduled to address national mortgage servicing standards during a 10:00 a.m. (ET) hearing. That panel also has a slated hearing for 2 p.m. (ET) Thursday to consider the nomination of Richard Cordray for the position of director for the Consumer Financial Protection Bureau. The House Financial Services subcommittee on insurance, housing and community opportunity has set a hearing to look at the future roles of the Federal Housing Administration, the Rural Housing Service and the Government National Mortgage Association in single- and multi-family mortgage markets. That hearing is scheduled for 10:00 a.m. (ET) Wednesday. Congress will leave Washington until Sept. 6 once its work for the week is complete.

Inside Washington (08/01/2011)

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* WASHINGTON (8/2/11)--On her final day with the Consumer Financial Protection Bureau (CFPB), Elizabeth Warren vowed to continue her fight for consumers of financials services. In an e-mail to agency staffers Friday, Warren thanked employees for their efforts and outlined the accomplishments of the bureau since its formation (American Banker July 29). Warren was President Barack Obama’s choice to set up the CFPB. The agency’s formation was mandated by the Dodd-Frank Act. “I leave this agency, but not this fight,” Warren wrote in the e-mail. “The issues we deal with--a middle class that has been squeezed and business models built on tricks and traps--are deeply personal to me, and they always will be” …