The National Taxpayers Union and several other conservative public policy groups on Tuesday urged Senate Finance Committee Chairman Orrin Hatch (R-Utah) and the committee to revisit the tax exemption enjoyed by large credit unions. The letter came as the credit union tax advantage is getting more scrutiny on Capitol Hill.
“Even as the Tax Cuts and Jobs Act is implemented, many opportunities remain to not only simplify the Tax Code, but also reduce the economic distortions that have become evident through provisions in the law over time,” they said. “Our organizations are concerned that some large credit unions have strayed from their intended purpose, as defined by the Federal Credit Union Act of 1934.”
The groups noted that many credit unions remain focused on their core missions but that “some of the larger institutions more closely operate as regular banks than credit unions.” The policy organizations added that a “tax exemption gives these select few credit unions a distinct edge over taxpaying banks and creates an uneven playing field, particularly over smaller community banks, which compete for similar customers.”
Earlier this year, Hatch pressed the National Credit Union Administration for explanations of its actions that have substantially loosened strictures on credit unions, and this week, he asked the IRS to consider requiring large credit unions to file Form 990, which most tax-exempt organizations do and which would enhance transparency into credit unions’ activities.