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Unrelated Business Income Tax

Unrelated Business Income Tax Letter to IRS

With the changes occurring in the IRS’ Tax Exempt & Government Entities Division, the UBIT Steering Committee (composed of CUNA, AACUL, CUNA Mutual Group and NASCUS) through outside tax counsel corresponded with the Acting Commissioner of the IRS regarding the ongoing issue of state-chartered credit unions and unrelated business income tax (UBIT). In the letter, the IRS was reminded of the repeated requests for assistance from the Exempt Organizations Division over a period of more than 10 years to resolve serious issues surrounding UBIT. One issue raised was that court rulings in favor of state-chartered credit unions regarding UBIT were not yet resolved as those refunds remain pending without IRS action. In addition, those certain court cases caused the IRS Manual to become inaccurate, yet the Manual remains unchanged. The UBIT Steering Committee provided the IRS with proposed revisions to its Manual and offered a comprehensive view of credit union activities and explanations of whether or not such activities should be subject to UBIT. In addition, the Committee requested a meeting with the IRS regarding these critical issues hoping to settle the matters.  

UBIT Letter to IRS (pdf)