IRS Contacting Individual Credit Unions Regarding Tax Exemption

Credit unions in a number of states have received letters from the Internal Revenue Service (IRS) stating that they are no longer tax exempt. Most of these letters are directed to state-chartered credit unions whose Form 990s were at one time filed as group returns by state regulators (both Oregon and Washington state regulators filed group 990s at one time). Most state regulators stopped providing this service years ago; this has apparently caused the IRS to conclude that the credit unions in the groups have failed to file their Form 990s for three or more years, which, by law, would require the automatic revocation of their tax exemptions.

Inexplicably, the IRS has questioned why some federal credit unions have failed to file a Form 990, even though federal credit unions are exempt from this requirement. In other cases, the IRS has also questioned why federal or state credit unions have failed to apply to the IRS for tax-exempt status, even though credit unions’ tax exemption is granted by operation of law rather than by application to the IRS.

On the national level, the Credit Union National Administration’s (CUNA) outside tax counsel to the Unrelated Business Income Tax (UBIT) Steering Committee is contacting IRS headquarters to seek an end to these misleading and erroneous communications.

If your credit union received this communication, or receives it in the future, you should reply to the IRS, explaining how you have complied with the Form 990 filing requirement, enclosing copies of at least your three most recent returns (if you are state chartered), and asserting that you are entitled to continue as tax exempt. This communication should be sent to:

IRS E/O Accounts
Mail Stop 6552
Ogden, UT 84201

We at the Northwest Credit Union Association (NWCUA) want to reassure you that this is not a revocation of your tax exempt status. This is a paperwork and recordkeeping problem only, and not a problem with the law. The Credit CARD Act, on the other hand…

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Federal.