As Tax Code Is On the Table, CUs Work to Maintain Exemption

WASHINGTON-Credit union lobby groups are keeping a watchful eye over the proposals being presented to overhaul the U.S. tax code. More than watching the proceedings, some are taking action. CUNA President and CEO Dan Mica reminded President George W. Bush of his previous support of credit unions’ tax-exempt status. Mica wrote in a Jan. 28 letter, “A key issue for the nation’s credit unions is your vision of reforming the nation’s federal tax code. You are on record as supporting the continued tax-exempt status of credit unions, and we are greatly appreciative of your position.” He noted the bipartisan commission of experts Bush has put together to come up with recommendations to reform the tax code. “While the commission’s efforts no doubt will be under tremendous scrutiny by those on Capitol Hill, and many others around the nation, we look forward to working with the commission, in coordination with Treasury Secretary John Snow, as it develops recommendations to meet your objectives,” Mica concluded. Additionally, the Joint Committee on Taxation-chaired by Senator Charles Grassley (R-Iowa) with Congressman Bill Thomas (R-Calif.) serving as vice chair-released its report on options for improving tax compliance and reform expenditures. Thomas announced last year he would be holding hearings into certain non-profits and whether they continue to earn their tax break, including hospitals and credit unions. NAFCU Director of Legislative and Political Affairs Brad Thaler explained about the report’s potential impact, or non-impact, on credit unions. “Of particular note, the credit union tax exemption was not mentioned anywhere in the document. There is no direct mention of credit unions anywhere in the document. Likely, if some of these were to become law, there would be some impact in terms of business practices for credit unions, but nowhere puts the credit union tax exemption on the table.” For example, one of the suggestions in the report is the elimination of the tax deduction for home equity loans.