CUNA, banks to testify at Nov. 3 CU tax hearing

WASHINGTON (10/28/05)--A representative of the Credit Union National Association (CUNA) will testify during a Nov. 3 hearing titled, "Review of Credit Union Tax Exemption." Bank groups apparently also will get a say on the credit union issue, according to CUNA lobbyists.

Congressman Bill Thomas (R-Calif.), chairman of the Committee on Ways and Means, yesterday officially announced the long-anticipated hearing. It will examine the legal history of the tax exemption for credit unions, to determine whether credit unions are serving the goals intended with their tax-exempt status, according to a release from the committee.

While witnesses had not been identified, they will represent the U.S. Government Accountability Office, the Internal Revenue Service, the National Credit Union Administration, academic experts, CUNA, the National Association of Federal Credit Unions, and banking groups, said CUNA Legislative Affairs Vice President Gary Kohn. CUNA had not yet determined who its witness would be.

The Ways and Means Committee also will accept written statements from the public.

Thomas said the hearing would examine the following issues:

  • The history of and Congress' rationale for providing tax exemption to credit unions;

  • Whether credit unions are serving the goals intended with their tax-exempt status;

  • The use of the tax benefit by credit unions; and

  • Changes in the credit union industry, including the growth in credit union membership and services.

CUNA and state leagues activated response plans last week after it was confirmed the House Ways and Means Committee planned a hearing on credit unions' tax status.

"CUNA and the leagues are ready," said CUNA President/CEO Dan Mica. "We have implemented a plan to ensure lawmakers hear a strong message from credit unions about why the tax status continues to be justified."

Click to view larger image During an April 19 broad-based hearing of the tax-exempt sector, House Ways and Means Committee Chairman Bill Thomas (R-Calif.) gives instructions to witnesses. Representatives of CUNA, leagues, and credit unions dotted the room and listened closely during the well-attended event. (Photo provided by CUNA)
Thomas said the Nov. 3 hearing is a continuation of the committee's examination of the tax-exempt sector.

"When credit unions were granted their tax-exempt status, they provided an important benefit to people of modest means," said Thomas in a press release. "Credit unions have been statutorily tax-exempt for almost 70 years now, and it is important that Congress understand whether there is a strong justification for the tax exemption."

He added that Congress has an obligation to ask questions to ensure that the "country is receiving something in exchange for the benefit of tax exemption."

CUNA's John McKechnie, senior vice president of governmental affairs, said Congress has a legitimate oversight role, which credit unions "respect--especially given the exemplary job that credit unions do every day to earn their tax exemption."

"At the same time, I think it would be a shame if banker attacks on the unique nature of credit unions would color this hearing," he said.

McKechnie added that based on credit union feedback from visits to Capitol Hill, "it appears credit union friends on the Ways and Means Committee are well prepared to outline the many reasons why the exemption should remain intact."

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