Credit Union Coalition Scores Victory Over IRS (Misc News: April 11, 2014)
Michigan credit unions scored a major victory when the IRS conceded that credit unions are no longer subject to the unrelated business income tax.
MCUL & Affiliates, along with CUNA, CUNA Mutual Group, American Association of CU Leagues and NASCUS have argued for 15 years that certain credit union products should not be taxed as “unrelated business income.”
CUNA said that the IRS issued a memo stating that the following income-generating activities are no longer subject to UBIT:
- Sale of checks/fees from a check-printing company
- Debit card program interchange fees
- Credit card program interchange fees
- Interest from credit card loans
- Sale of collateral protection insurance
- Credit life and credit disability insurance (not subject to UBIT if sold to members)
- Guaranteed asset protection auto insurance (not subject to UBIT if sold to members)
UBIT applies solely to state-chartered credit unions.
The UBIT victory is a huge win for Michigan credit unions, MCUL & Affiliates CEO Dave Adams said.
“The UBIT victory is proof of what the credit union system can accomplish when we all join together to fight for a cause,” Adams said. “MCUL has gone to bat for our members by putting our full efforts into the national fight against UBIT, and it’s great to see everyone's efforts pay off first in the courts and then by the IRS.”
According to CUNA, the IRS concession means credit unions can request refunds of taxes paid on these activities.