WASHINGTON (5/7/13)--A 550-plus page report on tax policy reform created
by 11 House Ways and Means working groups and delivered to the Joint
Committee on Taxation Monday mentions the credit union tax exemption, as
The report states, "Credit unions are exempt from
federal income taxation. The exemption is based on their status as
not-for-profit mutual or cooperative organizations (without capital
stock) operated for the benefit of their members, who generally must
share a common bond."
The report also notes that the definition of common bond has been expanded so more people can access credit unions.
It continues: "While significant differences between the rules under
which credit unions and banks operate have existed in the past, most of
those differences have disappeared over time."
This final sentence on credit unions in the report comes directly from a study from last years of the Clinton administration.
Upon release of the working groups' report, Credit Union National
Association President/CEO Bill Cheney emphasized that preserving the
credit union tax exemption is CUNA's highest priority.
"However," he added, "the most effective way that we can do that is to
ensure that our members and supporters, nationwide, understand the value
that credit unions bring to their memberships and consumers at large
and how the tax exemption plays a critical role for not-for-profit
"We cannot take anything for granted--we urge
credit unions to take action and tell the story to their members. Visit
our Tax Advocacy Toolkit for information and the tools to make that
happen." (See resource link for members-only toolkit.)
and Means Committee Chair Dave Camp (R-Mich.) and ranking member Sander
Levin (D-Mich.) called the report an "important and comprehensive
overview of the tax code, an overview of some of the most commonly
referenced previous tax reform proposals and summarizes the views of
more than 1,300 submissions offered to the Ways and Means Committee by
They pledged that the committee will "dig into its details over the coming weeks."
The Ways and Means working groups accepted public comment until April
15, and prior to that deadline CUNA participated in a committee briefing
on the credit union tax status, talking to four members of the powerful
tax-policy committee and about 15 staffers, and also submitted a
Among the points emphasized by CUNA about the tax exemption:
economic benefits provide gains to tax-paying credit union members and
other consumers that far outweigh any funds that would be brought in by
imposing a federal income tax on credit unions;
the Joint Committee on Taxation estimated the credit union "tax
expenditure" meant $0.5 billion in unclaimed government revenues in
2012, CUNA estimates that credit unions gave $8 billion back to their
members and other consumers in the form of low fees, low rates and other
- A tax on credit unions is a tax on 96 million Americans who are their members.
CUNA pointed out, credit unions provide full and fair service to all
members and more than half of members that rely on credit unions for
their primary financial services are middle class Americans, bringing in
annual incomes of $25,000 to $75,000.