Concerns that tax-exempt firms’ deposits on shaky footing
Washington, D.C (April 24, 2018)—The Independent Community Bankers of America® (ICBA) today expressed support for Senate Finance Chairman Orrin Hatch’s (R-Utah) call for large credit unions to report financial information required of other tax-exempt institutions. Hatch’s proposal comes after National Credit Union Administration (NCUA) Chairman Mark McWatters admitted in a recent letter to Hatch that the tax-exempt industry’s fund insuring credit union deposits would be at risk without taxpayer subsidies.
“ICBA and the nation’s nearly 5,700 community banks strongly support Chairman Hatch’s call for the IRS to consider requiring large credit unions to file Form 990s like other tax-exempt institutions,” ICBA President and CEO Camden R. Fine said. “As these financial firms grow and receive new powers from the NCUA, Congress should examine whether their multibillion tax exemption is still warranted. Chairman McWatters’ admission that the credit union industry’s insurance fund is underwritten by American taxpayers only underscores the need to review and ultimately abolish this taxpayer handout.”
In a letter to IRS Acting Commissioner David Kautter, Hatch today wrote that current laws requiring tax-exempt organizations to file an annual return help ensure they operate within the scope of their tax-exempt purpose. Amid concerns that credit unions have grown beyond their statutory mission of serving people of modest means while profiting from a tax exemption valued at $2.9 billion this year alone, requiring at least some of them to report to the IRS would provide needed information on how these financial firms are using their tax subsidies.
Responding to concerns raised by Chairman Hatch earlier this year, Chairman McWatters recently acknowledged that eliminating the credit union tax exemption would create a “safety and soundness issue” at the industry’s Share Insurance Fund, which insures deposits held in credit unions. This admission raises questions about the management of the fund and concerns about the growth of the credit union industry.
ICBA and the nation’s community banks will continue working to raise awareness of the credit union industry’s federal tax subsidy and the NCUA’s attempts to drastically increase the powers of these tax-exempt financial firms beyond their statutory limits.
The Independent Community Bankers of America®, the nation’s voice for nearly 5,700 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit ICBA’s website at www.icba.org.