You check your balance and find you have lots of money in the account, so you use it. Then you find out that you had checks and charges that hadn’t gone through your bank yet. At that date, the converted credit unions would become subject to a federal tax of 33% of the calculated income taxes in 2017, 66% in 2018, and 100% beginning January 1, 2019. In discussing the phases of the proposed conversion, we have used as an example, a credit union with assets of $250 million, tangible capital of $25 million, pre-tax income of $2.5 million, 1,000,000 shares outstanding, and 1,000 qualified members. As veterans represent a significant percentage of the credit union membership, a portion of the projected new tax revenues could be allocated to improve VA hospitals.
The reluctance in the past by politicians to address the unfairness of the present tax exemption for credit unions is attributable primarily to the perception that the credit union industry is too small to be of concern, and that credit unions provide a unique service to small affiliated groups that’s banks do not provide. The perception has also been that the elimination of the income tax exemption from the credit union industry would be injurious and would turn members against those members of Congress sponsoring this legislation. Account holders who pop into the bank can obtain their remaining funds immediately.
Banking industry leadership needs to be more aggressive by joining forces in seeking the elimination of the credit union tax exemption and, in doing so, creating a level playing field for depository institutions. This Plan needs to be implemented as soon as possible because of the rapid growth of credit unions facilitated by their tax advantage and their departure from their initial tax-exempt purpose, i.e. catering to small affiliated groups. Request your creditor to delete any entries that they have put on your credit report.
At the request of the Arkansas Bankers Association, Arkansas Federal Credit Union, the state’s 10th largest financial institution, was disinvited from participating in a $17.5 million loan for the Little Rock Tech Park. The Arkansas Bankers Association pointed out that it would be a stretch for the Little Rock Tech Park Authority to qualify for credit union membership. Bankers also objected to a tax-exempt credit union earning interest from a borrower supported by taxpayers via a sales tax approved by voters. To close a personal account, you can visit a local bank branch or write an account close letter.
However, during the September 2014 Board meeting, Board Member McWatters asked a series of questions of NCUA staff about what type of follow up the agency does to ensure that the credit union follows through on its commitments, especially to those people of modest means. I think it is in the public interest for the NCUA Board to evaluate if this credit union complied with its plan and that this deliberation be done in an open Board meeting.