Removing Barriers Blog

CUNA Writes to W & M Prior to Hearing on 2017 Tax Law
Posted March 28, 2019 by CUNA Advocacy

CUNA wrote to Chairman Neal and Ranking Member Brady prior to the Ways and Means Committee hearing entitled, “The 2017 Tax Law and Who It Left Behind.” In the letter CUNA wrote about the importance of having not-for-profit credit unions as vibrant and viable alternatives in the financial services marketplace and reminded the Committee of the significant financial benefits credit unions provide to their members.

While the Tax Cuts and Jobs Act of 2017 (TCJA) did not make any alterations to credit unions’ tax status it imposes several taxes on not-for-profit entities.

One provision requires tax-exempt organizations to pay a 21% excise tax on the five highest paid employees’ compensation that individually exceed $1 million per year. Contracts in place at for-profit entities before Nov. 2, 2017 are exempt, but no such exemption exists for not-for-profits.

“This amounts to a retroactive tax on the nonprofit sector as these contracts were agreed upon with certain tax considerations assumed,” the letter reads. “CUNA and the nonprofit sector are deeply concerned about this lack of parity.

CUNA also expressed concerns about a TCJA provision that extends Unrelated Business Income Tax (UBIT) to certain employee fringe benefits, most notably parking and transportation benefits and calls for a delay in this provision until stakeholders are provided with complete, details instructions on how to file.

On behalf of America’s credit unions and their 115 million members, CUNA will continue to promote the credit union difference as Congress debates the TCJA or any other tax legislation.