Business Finance

Could credit unions lose tax exempt status in tax reform?


Although some lawmakers say credit unions will not lose their tax exempt status, the option remains on the table. Credit unions are pushing back with public campaigns to preserve their tax status.


A long standing tradition of tax exempt credit unions

With continuing talks on Capitol Hill regarding tax reform, the topic of taking away credit unions’ tax exempt status comes up at nearly every attempt to reform the tax code. Senate Finance Committee Chairman Max Baucus (D-Mont.) said in May, “Credit unions’ tax exempt status is not going away, not on my watch. Over the years, folks in D.C. have tried to cut your [credit unions’] tax exempt status, and I’ve gone to the mat to fight back.” But even with Baucus’ vote of confidence, the credit union is standing up publicly.

The Credit Union National Association (CUNA) has released a “Don’t Tax My Credit Union” advocacy campaign, offering materials for individual credit unions to send to members which prompt people to not only watch the following video, but to send a form letter on to ensure Congress doesn’t raise taxes on 96 million credit union members which would mean higher loan rates, higher fees, and less support in the community:

[pl_video type=”youtube” id=”bFlOP8O0AEw”]

CUNA pushes for tax exempt preservation

In response to the Credit Union Tax being included for Senate consideration in June, long after Baucus’ comments, CUNA President and CEO, Bill Cheney said, “As CUNA has been saying for some time, our tax exemption, and its preservation for the long-term, is actively in the mix of discussion on Capitol Hill, as this options paper clearly shows.”

Cheney also noted that as not-for-profit cooperatives, credit unions return billions of dollars in benefits to consumers each year that far exceed any potential tax revenue.

National Association of Federal Credit Unions’ (NAFCU) Vice President of Legislative Affairs Brad Thaler said the trade is close to tax reform discussions on Capitol Hill, and continues to hear that lawmakers are averse to tinkering with the credit union tax exemption.

Getting the community involved

Credit unions are now emailing members, urging them to reach out to lawmakers and to tweet using the #DontTaxMyCU hashtag. As of publication, every tweet we read was in support of the movement, with nothing being tweeted under the hashtag that is critical of the campaign or concept of preserving Credit Unions’ tax exempt status:

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