Credit Union Coalition Scores Victory Over IRS, Michigan Credit Unions No Longer Subject to UBIT
LANSING, MI (April 10, 2014) – Working together produces results. That’s what a major victory over the Internal Revenue Service proves about the value of credit unions joining together in a national effort to fight for their best interests.
The Michigan Credit Union League and Affiliates takes pride in aggressively advocating for our member credit unions. So we used our advocacy resources funded in part through member credit union contributions, to join a national effort to fight an IRS tax against the credit union industry. This week the IRS conceded credit unions are no longer subject to the costly tax.
For the past fifteen years, credit unions have been fighting what the IRS deemed as “unrelated business income” that could therefore be subjected to income tax. It’s known as UBIT or the Unrelated Business Income Tax. According to CUNA, the IRS issued a memo stating the following credit union income-generating activities are no longer subject to the 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); and
- Guaranteed asset protection (GAP) auto insurance (not subject to UBIT if sold to members).
Since the UBIT applies solely to state-chartered credit unions, the UBIT victory is a huge win for Michigan credit unions, according MCUL CEO Dave Adams.
“The UBIT victory is proof of what the credit union system can accomplish when we all join together to fight for a cause. The MCUL has gone to bat for our members by putting our full efforts into the national fight against UBIT, and it’s thrilling to see our efforts literally pay off,” Adams said.
According to CUNA, the IRS concession means credit unions can request refunds of taxes paid on these activities.Go to main navigation