The 1934 Federal Credit Union Act (FCUA) stated credit unions receive a tax exemption because "credit unions are mutual or cooperative organizations operated entirely by and for their members." Credit unions are eligible for tax-exempt status if they meet the following criteria:
- Operate on a not for profit basis
- Organized without capital stock
- Operate for mutual purposes
Over the past two decades, credit unions have soared in popularity. According to the American Bankers Association, there are now 208 credit unions with over $1 billion in assets. In 1991, only 11 credit unions surpassed the $1 billion mark. The bank lobby also lambastes credit unions for offering its members such standard services as checking accounts and mortgages. Still, credit unions are a blip on the radar in the financial services industry. Big banks control a whopping 93 percent of the industry.
The widespread growth of the credit union industry is clearly a reflection of the high level of service provided to their member-owners. In addition, the surge may be partially a result of the public's general disdain for large banks, their inattentive service and their numerous fees. National credit union associations have mustered their resources to defend the credit union tax exemption. A website has been launched -- www.DontTaxMyCreditUnion.org -- to help members stay abreast of the battle.
We encourage AltaOne members to research the tax-exempt matter more thoroughly and decide how active you want to become in the fight to protect your credit union and your money.
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