FOR IMMEDIATE RELEASE
March 27, 2019
Credit Union National Association (CUNA) sent a letter for the record ahead of the House Ways and Means Committee hearing on the 2017 tax law. Credit unions are exempt from federal income tax because of their structure as not-for-profit financial cooperatives and their mission to provide significant financial benefits to their members. There are over 115 million credit union members who benefit by $12 billion a year as a result of paying fewer and lower fees, lower loan rates and earning higher rates on deposits.
The Tax Cuts and Jobs Act of 2017 (TCJA) recognizes the federal income tax status of credit unions. By not altering the credit union federal income tax status, Congress demonstrated its long-held belief in the credit union model and structure. However, the TCJA imposes a 21% excise tax on certain executive compensation provided by tax-exempt organizations.
CUNA and other not-for-profit employers are concerned about the lack of parity between existing for-profit and not-for-profit employee contracts regarding the not-for-profit excise tax and the deductibility of corporate executive compensation. CUNA urges Congress to pass legislation to ensure parity in this area between the for-profit and not-for-profit sectors.
The new tax law also imposes the unrelated business income tax (UBIT) on certain fringe benefits provided by not-for-profit employers. This provision basically taxes an expenditure made by an employer, not sales or other revenue-generating activity. CUNA has lobbied Congress to repeal this tax or at least delay its implementation until the Internal Revenue Service issues guidance that provides more clarity.
Read the letter in full here.
Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 115 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.