January 18, 2008
Tax-Exempt Credit Union Sues IRS Over UBIT Bill for Insurance Sales
The Milwaukee Journal Sentinel reports that Community First Credit Union of Appleton, Wisconsin has filed suit in federal court seeking a refund of $54,000 in taxes it paid in 2006 on income from the sale of credit life and credit disability insurance and guaranteed auto protection insurance. The credit union, which has $916 million in assets, is challenging the IRS' position that selling such insurance falls outside of the credit union's tax-exempt purposes and so is subject to the urelated business income tax (UBIT). The article reports that both the Credit Union National Association and the Wisconsin Credit Union League support Community First's position. The Wisconsin organization also lists the American Association of Credit Union Leagues, the National Association of State Credit Union Supervisors, and the CUNA Mutual Group as supporting the lawsuit in a press release. The release also indicates that the case is the lead one in the nation for this issue.
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