US Credit Unions Will Remain Tax-Exempt, Says Treasury

by Mike Godfrey, Tax-News.com, Washington

19 March 2004

In the light of recent comments made by the chairman of the Federal Deposit Insurance Corporation, Don Powell, that US credit unions should pay tax, the Treasury Department has reassured the Credit Union National Association that the government will continue to oppose such a move.

The fact emerged after a meeting between CUNA and the Treasury's assistant secretary for financial institutions on Tuesday, after which a spokeswoman confirmed the Bush administration’s line on the issue.

The meeting echoed comments made by Treasury Secretary John Snow last month when he revealed in a speech that: “We oppose this talk of taxation of you and your industry."

The credit unions have come under increased scrutiny regarding their tax status recently after the Chairman of the House Ways and Means Committee, Bill Thomas (R-Calif) announced that he wants to launch an investigation into organisations that receive tax benefits.

Banks, too, have complained that the credit union’s tax exemption gives them an unfair competitive advantage, and FDIC chairman Powell claimed that the Treasury would benefit to the tune of $2 billion by taxing the sector.

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