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Taxation Hearing Information

The House Ways & Means Committee, chaired by Congressman Bill Thomas (CA-22) held an oversight hearing on the credit union tax-exempt status on November 3, 2005. Regulatory agencies & academic witnesses, as well as industry representatives testified. This included not only CUNA and another credit union trade association, but also witnesses from the American Bankers Association, America's Community Banks, and the Independent Community Bankers Association. Chairman Bill Thomas closed the hearing by stating that he would not try to subject credit unions to federal taxation. On November 17, 2005, CUNA submitted a follow up letter that addressed some of the banker attacks in the hearing that required a more detailed response.

Chairman Thomas did put credit unions on notice that he expected greater "transparency, accountability and verifiability," particularly in regard to such issues as the filing of Form 990s (and the compensation disclosures therein) for all credit unions and in measuring credit union service to people of modest means. On this latter point he was critical of the NCUA and the movement for not having a more precise definition of modest means. He made it clear that while in the 1930s that term may have applied to a broad middle class that lacked access to affordable financial services, today he believes modest means encompasses service to those with low-income, women and minorities. He is in favor of a data collection and reporting mechanism, whether CRA or otherwise, to measure credit union service to these groups, and he believes the movement should support this as a means of verifying that our tax-exempt status continues to be deserved. Structural arguments for the tax exemption are secondary in the Chairman's estimation.

Chairman Thomas was critical of the NCUA for what he called its unwillingness to recognize the benefit of data collection that provides the transparency and accountability that he says a tax- preferred movement like credit unions ought to have. Near the hearing's conclusion he said of the NCUA: "I am concerned that an agency that is supposed to be a regulator is an enabler."

No legislation has been introduced in the 109th Congress on the federal tax-exempt status of credit unions. However, CUNA continues to be on guard against any Congressional legislation that would seek to tax credit unions as a means of offsetting the cost of tax relief, deficit reduction, or hurricane cleanup. Such taxation would end up in a net loss of revenue to the federal treasury as well as hurt hurricane victims.

Written Testimony of Harriet May on Behalf of CUNA

Hearing Transcript

Letter of Support from Americans for Tax Reform

Letter of Support from Congresswoman Carolyn Maloney (D-NY)

Letter of Support from Congressman Todd Akin (R-MO)