Joint Committee Issues Tax Report

The Joint Committee on Taxation issued a report on tax reform this week to eleven bipartisan tax reform working groups formed by House leadership. The “Report to the House Committee on Way and Means on Present Law Earlier and Suggestions for Reform Submitted to the Tax Reform Working Groups” can be found here.

The report is nearly 600 pages long and mentions credit unions 35 times, according to Ryan Donovan, senior vice president of legislative affairs for the Credit Union National Association (CUNA).

With Congress looking at hundreds of tax exemptions this year, credit union leadership is actively informing legislators at state and federal levels about the benefits that not-for-profit, cooperative credit unions provide to members. The case for the credit union tax structure was made by Northwest Credit Union Association (NWCUA) President and CEO Troy Stang in a recent Anthem article.

As the joint committee worked to prepare its massive report, CUNA staff met with numerous members and staff, Donovan said. Last month, a CUNA delegation leveraged an opportunity to meet with the Financial Services Working Group to advocate for the credit union tax status. The Committee working groups received more than 1,300 comment letters including a detailed submission by CUNA.

Donovan’s analysis of the Joint Committee’s report finds most of the “credit union” mentions are in the initial parts of the report where the Internal Revenue Code is described as it currently exists. For example:

“Credit unions are exempt from Federal income taxation. The exemption is based on their status as not-for-profit mutual or cooperative organizations (without capital stock) operated for the benefit of their members, who generally must share a common bond. The definition of common bond has been expanded to permit greater utilization of credit unions. While significant differences between the rules under which credit unions and banks operate have existed in the past, most of those differences have disappeared over time.”

More information on the “significant differences” can be found in a 2001 Treasury Department report, “Comparing Credit Unions with Other Depository Institutions” (Report-3070, January 15, 2001, p. 2) here.

The CUNA analysis noted that credit unions are mentioned in Monday’s report in the context of the two working groups with jurisdiction over credit unions: Charitable/Exempt Organizations and Financial Services. The Charitable/Exempt Organization group noted comments which urged the Committee to “Maintain the tax exemption for Federal and State credit unions.” The Financial Services group summary of comments received also included “Retaining tax-exempt status for credit unions.”

The Senate is also considering tax reform proposals and is likely to review tax-exempt organizations as well.

“As Congress continues this detailed process of looking at every tax exemption with a fine tooth comb, credit unions need to be at the table, reminding Congress of credit unions’ structure, value and community impact,” said Jennifer Wagner, vice president of legislative advocacy for the NWCUA. “This issue will be front and center later this month when we meet with our delegation during the Spring Hike the Hill.”

 

Questions? Contact Lynn Heider: 503.350.2225, lheider@nwcua.org.

Posted in Advocacy News, CUNA.