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Michigan Credit Union League Home » Information Services » Publications » News Articles  

CUNA: IRS Is ‘Completely Wrong’ on Tax Exemption Issue   (Misc News: September 16, 2011)

A letter from the IRS stating that some credit unions are no longer tax-exempt is "completely wrong" and something that the CUNA will work on tirelessly to set the record straight, association President/CEO Bill Cheney said.

Recently, several state-chartered credit unions, and a few federally chartered credit unions, received letters notifying them that they had lost their tax-exempt status after their respective regulators failed to file Form 990 tax returns on their behalf.

In Michigan, MCUL & Affiliates CEO David Adams sent a letter to credit union CEOs requesting that they contact the league if they have had communications with the IRS on this issue.

“If the IRS has been in contact with you concerning this issue, we would like to hear about it,” Adams said.

He added that credit unions that have had communications with the IRS on this issue should send a note along with any documentation to Mike DeFors, the league’s vice president of regulatory affairs, who will collect submissions and pass them along to CUNA.

Various state credit union regulators – including OFIR in Michigan – at one time filed Form 990 tax returns for all state-chartered credit unions under their jurisdiction, but that practice was stopped years ago. OFIR laid out its filing directive in a Letter to Credit Unions (2006-CU-01). Federally chartered credit unions never were required to file the form.

In a letter to IRS Commissioner Douglas Shulman and Director of Exempt Organizations Lois Lerner, CUNA reminded the IRS officials that state-chartered credit unions, which now file their own returns, have met their annual filing requirements and should remain exempt.

Cheney told CUNA News Now that the association hopes the IRS issue "is simply a paperwork error." However, he added, "if it's not a paperwork error – and we are looking into this – we will not rest until this effort is ceased, its origins exposed, and the tax agency understands thoroughly that the credit union tax exemption comes from Congress and the individual charters of credit unions, not from the IRS."

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