VBA Will Not Push CU-Taxation Legislation, but Virginia League Warns CUs Not to Let Down Their Guard

RICHMOND, Va. – The Virginia Bankers Association notified state legislators it will not seek the introduction of legislation to tax state-chartered CUs, but the Virginia Credit Union League was quick to clarify for CUs that this does not mean the bankers are waving the white flag. Just the contrary, said League President/CEO Rick Pillow, “A banker-sponsored taxation bill is not the only threat we face during the coming General Assembly. A significant threat still exists, and credit unions must remain vigilant.” According to the Virginia Credit Union League, the letter the VBA sent to legislators advising them of the association’s change of plans “bashed” credit unions’ tax status, noting “the credit union situation continues to cry out for a remedy.” The VBA also argued that the state is missing out on a revenue opportunity by not levying additional taxes on CUs. Still, Pillow said he was “pleased to learn that the bankers have opted not to pursue a tax increase on credit union member-owners at this year’s General Assembly.” But that doesn’t eliminate the possibility that a state legislator could introduce their own piece of credit union taxation legislation. The Virginia League included that possibility on its list of `primary threats’ for CUs in the upcoming General Assembly. Other items on the list included: a recommendation for CU taxation from any of the various taskforces/committees studying tax reform; a recommendation in the legislature that the CU taxation issue be studied; and a resolution from the General Assembly supporting the elimination of federal preemptions with regard to CU taxation. Regarding the last item on the list, the League said the bankers’ goal would be for Congress to waive the preemptions, thus empowering states to tax both state and federal credit unions. Last November, after the VBA released one of two studies it conducted on the state’s credit union system including CUs’ tax exemption to state legislators, Pillow put Virginia CUs on notice to prepare themselves to fight any effort for CUs to be taxed. One month later, in December, in what Pillow called “an unprecedented strike at Virginia’s credit unions,” the Virginia Bankers Association sent letters to local government officials signed by VBA Executive Vice President William Ayers that argued that credit unions were hurting local economies because they don’t pay the same taxes as their competitors. Commenting on the VBA’s latest strategy decision, Pillow said, “As much as we wish we could celebrate bankers’ decision not to push a taxation bill of their own, we recognize that too many opportunities to target credit unions’ tax status still exists.” He reassured credit unions that the League “will proactively pursue our legislative and public relations plan for the coming General Assembly.” -