CUNA Addresses Notices From the IRS "Revoking" State Chartered CUs' Tax Exemption

Posted by Marissa Anema Friday, September 16, 2011 10:20:00 AM

CUNA informed the Leagues that many state chartered credit unions (SCCUs) are receiving notices from the IRS that the credit union has lost its tax-exemption because the IRS hadn't received their 990 forms.

CUNA advised SCCUs last year that the IRS was ordered by Congress several years ago to clean up its records on what organizations are still properly tax-exempt; failure to file 990 forms for the last three years was the trigger for notifying entities they no longer were tax-exempt. According to CUNA's Senior Vice President and Associate General Counsel for Regulatory Compliance Kathy Thompson, "undoubtedly going on here is that at some point in the past the state regulator filed a group 990 with all their state credit unions listed on it" (almost all state regulators have discontinued filing the group 990). "The IRS computer system has now done a search of old filers and obviously failed to find the state regulator's current group 990s - so the IRS computers generated a letter that is causing credit unions heartburn."

This assertion by the IRS that some credit unions are no longer tax-exempt is "completely wrong" and something that CUNA will work on tirelessly to set the record straight, inside and outside the credit union movement, CUNA President/CEO Bill Cheney said Thursday.

CUNA in a letter to IRS Commissioner Douglas Shulman and Director of Exempt Organizations Lois Lerner reminded the IRS officials that state-chartered credit unions, which now file their own returns, have met their annual filing requirements and should remain exempt. The letter is available here.

CUNA also released model letters that credit unions can use to challenge any assertions by the IRS that they have lost their tax exemption because they used to be part of a group whose filing was handled by their state regulator: a letter designed for state-chartered credit unions and a letter for any federal credit unions that have, for some reason, received similar correspondence from the IRS.


Comments are closed on this post.