National Credit Union Administration (NCUA) Chairman Mark McWatters said eliminating credit unions tax-exempt status would be a mistake, according to a response letter sent to Senate Finance Committee Chairman Orrin Hatch (R-UT).
Hatch had sent a letter to the NCUA in January outlining concerns that credit unions are evolving away from their original tax-exempt purpose. Hatch also raised questions about recent changes to field-of-membership (FOM) rules.
In his response, McWatters said that eliminating tax-exempt status for credit unions would create an issue for the National Credit Union Share Insurance Fund that could potentially fall on American taxpayers to fix.
“Federal credit unions continue to be member-owned, democratically operated, not-for-profit organizations that are managed by boards of directors that consist mostly of volunteers, and work primarily to meet the credit and savings needs of consumers of modest means,” McWatters wrote.
The National Association of Federally Insured Credit Unions (NAFCU) backed McWatters claims.
“The NCUA has thoroughly responded to Chairman [Orrin] Hatch’s inquiries, with specifics laying out how the loss of the credit union tax exemption would impact credit unions and the American taxpayer,” NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt said. “NAFCU appreciates Chairman Hatch’s interest in performing the Senate Finance Committee’s oversight role and we look forward to working with Congress to focus on issues critical to the credit union industry and our members.”