New 2020 IRS Mileage Rates Now in Effect Posted by AVCU on 9:35 AM

The Internal Revenue Service issued the 2020 optional standard mileage rates on Tuesday of this week.  These are the rates taxpayers and tax professionals can use to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Starting on Jan. 1, 2020, the standard mileage rates for the use of a car (along with vans, pickups or panel trucks) will be:

• $.57.5 cents per mile driven for business use, down half a cent from the 2019 rate;
• $.17 cents per mile driven for medical or moving purposes, down three cents from the 2019 rate; and
• $.14 cents per mile driven on behalf of charitable organizations.

The business mileage rate declined half a cent for business travel driven and three cents for medical and certain moving expenses from the 2019 rates. The charitable rate is set by statute and stays unchanged.

Taxpayers CAN'T:

• claim a miscellaneous itemized deduction for un-reimbursed employee travel expenses
• claim a deduction for moving expenses, except members of the Armed Forces on active duty and moving under orders to a permanent change of station.
• use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. 
• use the business standard mileage rate for more than five vehicles simultaneously

For employer-provided vehicles Notice 2020-05 describes the maximum fair market value of automobiles first made available to employees for personal use in calendar year 2020 for which employers can use the fleet-average valuation rule or the vehicle cents-per-mile valuation rule.

Kansas CUs Fend Off Statehouse Tax Threat Posted by Association of Vermont Credit Unions on 1:26 PM

According to reporting by CU Journal, earlier this month a Kansas state Senate committee met to SB.238, which would decrease the state income tax on banks, and also SB.239 to tax credit unions over $100 million in assets. Both bills were crafted by the Kansas Bankers Association.

On Tuesday of this week the 11-member committee voted to “not recommend” the credit union tax bill and decided to make “no recommendation” on the bank tax bill. Instead, the Kansas legislature called for more research data on the topic. The Kansas legislature's decision on the credit union taxation bill was a win for the the Heartland CU Association and the entire industry.

The CU association said that banks want a double standard in the form of creating a loophole so they can be taxed like not-for-profits without having to play by the same rules as not-for-profits. In its testimony, the association highlighted economic factors, including that banks control 99% of the commercial market in the Sunflower State.

Credit unions may only account for 1% of the commercial market, says the Association, but that includes small businesses and farmers that banks aren’t willing to take a chance on.  It also argued that Kansas has lost 244 credit union charters in the past five decades, declining from 322 credit unions in 1969 to 78 credit unions today.

The battle in Kansas is the latest banker state-level attempt to impose taxes or restrictions on credit unions. In February, the Nebraska Banking, Commerce and Insurance Committee considered a bill that would have required state regulators to notify banks whenever a CU applied to expand its field of membership. An in 2018, an effort to tax Iowa credit unions ultimately failed, but two credit unions were forced to change their names to comply with legislation that prohibits Iowa credit unions from using the name of state universities in their own name.

Read the original CU Journal article.

ABA Chair: Time to Fix CU Tax Exemption Posted by Association of Vermont Credit Unions on 12:37 PM

Laurie Stewart, Chair, American Bankers Association

The new chair of the American Bankers Association, Laurie Stewart, thinks it's time for the banking lobby to address the tax-exempt status of credit unions. That's an age-old song by bankers, but what's different this time is that Stewart's $686 million bank used to be a credit union.  Stewart lead the conversion of Sound Financial in Seattle from a credit union to a bank in 2003.

In a recent American Banker article, Stewart cites the recent trend of credit unions buying banks as a frustration and how the ABA plans to address the issue in the year ahead.

Stewart says she's "fired up about this situation with credit unions buying taxpaying community banks and taking them off the tax rolls of communities around the country."  She goes to take exception to a credit union buying a bank's book of business with the assumption there's a common bond that results.  She objects to credit unions offering the same services as banks but not accountable to the Community Reinvestment Act, having less of a compliance burden, and reduing tax revenues for government.

She also claims that some credit union CEOs believe in future credit union taxation and that they'd be better served if they could get their industry to structure a tax and be more in control rather than have to be on the defensive all the time.

Stewart also feels the most pressure from credit unions on commercial real estate, saying that credidt unions make loans in the bank market at incredibly low rates with very generous terms that she believes are not prudent and are not scrutinized at the same level as banks conduct.

See the full interview online.

ICBA Arms Banks With Tools to Fight Credit Unions on Local Level Posted by AVCU on 9:20 AM

Last week, the Independent Community Bankers of America began arming its members to fight credit unions on the local level.

The effort is part of the organization’s “Wake Up” campaign and tools include customized op-eds that can be sent to local news organizations, talking points, and a white paper for members to use when discussing credit unions, and in particular the credit union tax exemption.

The website also features state-level reports the ICBA said demonstrate the amount of federal income taxes credit unions in each state avoided paying, the total assets that credit unions in that state held, the amount that credit unions used for non-member expenses and the number of teachers, police officers and social workers that could have been hired if credit unions had paid taxes.

A landing page on the ICBA website even plays off CUNA’s “Open Your Eyes to a Credit Union” campaign. (CU Times, 10/25/19)

“The ‘Wake Up’ campaign encourages policymakers to open their eyes to the growing threats posed by credit unions’ abandonment of their founding mission facilitated by their captive federal regulator, the National Credit Union Administration,” the trade group said.

The ICBA op-ed makes clear the group’s efforts and allows banks to insert their own name before sending it to a news organization.

“[BANK NAME] and other community banks encourage policymakers to open their eyes to the threats posed by these financial firms’ abandonment of their founding mission facilitated by their captive federal regulator,” the op-ed states. “We continue our call for Congress to review this industry’s unjust, taxpayer-funded annual subsidy.”

The website also provides tips on how to get an op-ed placed; the pointers are only available to ICBA members.

The ICBA white paper, “Do They Know They’re Tax Exempt,” purports to examine the ways that credit unions have deviated from their original mandate.

“Credit unions do not primarily serve individuals of modest means, nor do they restrict their activities to the specific communities that they are mandated to serve,” the ICBA said.

Credit union trades groups have been firing back at banker attacks for quite some time. CUNA’s website, “Don’t Tax My Credit Union” also features easy ways credit union members may use to contact their members of Congress.

NAFCU’s “Grassroots Action Center” also eases the way for members to contact members of Congress and features a dedicated page, “Defend CUs From Banker Attacks.”

CUNA Advocacy Director Ryan Donovan on Thursday sent a letter to congressional offices noting the renewed effort.

“The bankers are at it again: complaining about the credit union tax status and how credit unions are using their structure and mission to serve their members,” he wrote. “Their complaints aren’t new but that doesn’t mean they can go unanswered.”

Banker Group's New Campaign Wants Congress to "Wake Up" to "Risky, Tax-Subsidized" CUs Posted by AVCU on 9:51 AM

On Monday, the Independent Community Bankers of America (ICBA) launched a nationwide campaign calling on policymakers and the public to “Wake Up” to the “risky practices, costly tax subsidies, and irresponsibly lax oversight of the nation’s credit unions.”

Both credit union trade groups have responded, with CUNA  clarifying the reason for the credit union tax exemption and issuing a statement citing the more than a quarter-trillion dollars paid by banks in fines over the last decade, and NAFCU saying the real issue is big banks "eating community banks' lunch." (CU Today, 10/21/19)

The ICBA said the Wake Up campaign (click here for video) will encourage policymakers to “open their eyes to the growing threats posed by these financial firms’ abandonment of their founding mission facilitated by their captive federal regulator,” the National Credit Union Administration.


“ICBA and the nation’s community banks are calling on Washington to stop pressing the snooze button and wake up to the risks of aggressive, growth-obsessed credit unions and the costs of their taxpayer-funded subsidies,” says ICBA President and CEO Rebeca Romero Rainey repeatedly while berating the viewer to "Wake Up!".

“With credit unions abandoning their founding mission in the name of expansion and risky lending, it is long past time for Congress to level the playing field between community banks and credit unions while reining in the National Credit Union Administration’s expand-at-all-costs agenda.”

Read more on CUToday.info

Time to Update Project Zip Code Data Posted by AVCU on 1:26 PM

A new version of AVCU's Project Zip Code version 19.0 is now available for download at www.pzconline.com/install. Project Zip Code (PZC) is a program that matches raw credit union membership data with state and federal lawmaker districts.

Our only mission is service to members, who are our greatest grassroots strength. PZC enables us to quantify this strength and illustrate to lawmakers the number of credit unions members in their district. The ability to show a lawmaker how many thousands of credit union constituents they have is an extremely powerful advocacy tool.

No personal data or individual information is ever collected or leaves the credit union. PZC receives only the counts of records successfully matched, and all data remains secure. PZC is compliant to with all state and federal privacy laws and regulations.

Currently 99 million credit union members have been matched to their federal and state legislative districts.

VT Bankers Urge Congressional Review of NCUA, CU Mission Posted by AVCU on 12:49 PM

On Wednesday of this week, the Vermont Bankers Association joined 50 other state-level bank trade associations in a joint letter to the leaders of the Senate Finance Committee and House Ways and Means Committee.  They called for a review of the credit union industry to determine whether it is living up to its statutory mission of serving people of “small means.” The joint letter from bankers in all fifty states and the Commonwealth of Puerto Rico, also called for a thorough examination of the NCUA and its oversight of the credit union industry.

Citing research from an American Bankers Association commissioned study released in June, the state associations raised concerns that credit unions are actually contributing to greater economic inequality and endangering taxpayers by:

• increasingly providing services to high-income consumers rather than low to moderate income consumers
• making high risk loans
• buying up tax-paying banks, and
• that the NCUA has enabled credit unions to creep far beyond their statutory authority while allowing regulatory capital requirements and other safety and soundness rules to become substandard.

Not surprisingly, the letter fails to disclose that the research cited was commissioned by the American Bankers Association which throws into question its objectivity.

• Read the Joint State Bank Association letter. 
• Read the latest ABA study on credit unions. 

Bankers Call for CU Tax Again, Calling a Cheerleader Posted by Association of Vermont Credit Unions on 3:16 PM

As reported by CU Times, the Independent Community Bankers Association (ICBA) on Monday renewed their call for Congress to re-examine the credit union tax exemption in an effort to “promote a level playing field” for financial institutions.  The ICBA released its “Community Focus 2020” legislative agenda in which it singled out credit unions and the NCUA for criticism.  In the report, ICBA claims . . .

Today’s credit unions are leveraging their tax subsidy for rapid growth, purchasing multi-million-dollar stadium naming rights, flaunting their nearly unlimited fields of membership, and expanding their activities well beyond their original mission.  ICBA continues to oppose attempts by the NCUA to flout statutory limits and liberalize restrictions on fields of membership, member business lending, and issuing supplemental capital.

The bankers contend that credit unions have become “virtually indistinguishable” from banks.
But having finished a comprehensive tax overhaul effort during the last Congress, the House and Senate may be unwilling to open the tax code for major changes. On the other hand, Congress may make so-called technical corrections legislation making small changes to the bill that was enacted.

In that case, bankers could attempt to convince lawmakers to add credit union provisions to that bill.

The ICBA also said that Congress should:

• subject credit unions to the Community Reinvestment Act
• require greater disclosure of credit union compensation, and
• insure that regulations make it as easy for a bank to acquire a credit union as it is for a credit union to acquire a bank

Ironically, on most other legislative and regulatory issues, the ICBA’s agenda mirrors many of the priorities set by CUNA. For instance, the ICBA called on lawmakers to guarantee that merchants be required to follow the same data security standards that financial institutions must follow and to create a safe harbor to allow financial institutions to serve marijuana-related businesses.

Treasury Drops CU Tax Estimate by 1/3 Posted by Association of Vermont Credit Unions on 10:43 AM

CU Times reports that the latest Treasury Department estimate of tax expenditures has reduced the five-year estimate of the cost of the credit union tax exemption by almost a third. Treasury now estimates the credit union tax exemption will cost $10.562 billion in lost tax revenue between 2018 and 2022. A year ago, it estimated the credit union tax exemption would cost the federal government $15.763 billion between those same years. No reason for the change is given.

Treasury also reports more than 50 tax expenditures larger than the credit union tax exemption.
The congressional Joint Committee on Taxation recently estimated that the credit union tax exemption will cost the federal government $9.9 billion between 2018 and 2022 . . . even less than the administration’s estimate.  The tax expenditure figures are used by policymakers when they are writing tax legislation.

The credit union tax exemption came under fire this year, when Senate Finance Chairman Orrin Hatch (R-Utah) questioned whether it was outdated, saying there is little difference between credit unions and banks. Hatch asked the Internal Revenue Service to require federal credit unions—at least the largest ones—to file informational tax returns. IRS officials did not agree with Hatch’s request. Hatch is retiring at the end of this year and so far, no other member of Congress has made similar requests.

Credit union taxation is a perennial issue for banking groups contending that credit unions have an unfair competitive advantage because of the tax exemption.

New Online Community Enhances CU Advocacy Posted by Association of Vermont Credit Unions on 12:12 PM

CUNA launched a new online community this week for credit unions participating in the Member Activation Program (MAP).  Its a forum where participants can discuss advocacy issues, communications, best practices, and exchange ideas and resources to better advocate for credit unions. The MAP Community is a free community for CUNA/League members.

The MAP Community is designed as a resource for credit union advocates to:

• Learn about advocacy efforts;
• Connect with their peers;
• Seek advice;
• Ask questions;
• Aid others;
• Participate in discussion topics;
• Search a collaborative file library for on-the-go resources; and
• Share ideas and resources.

CUNA's new MAP Community is the only forum in the credit union industry providing a place to discuss member advocacy efforts and communications as well as advocacy best practices for credit unions.

Explore the MAP Community here. and watch the video below to learn more about MAP.

CUs Generate $17B in Tax Revenues Posted by Association of Vermont Credit Unions on 11:06 AM

CUNA again issued statements this week correcting banker falsehoods about their claims regarding the credit union tax status.  In response to banker statements that credit unions pay no taxes, CUNA illustrated how credit unions’ presence in the marketplace generates $10.7 billion in federal tax revenue and an addition $6.4 million in state and local tax revenue.

Tax revenue contributions from credit unions include:

• $4.2 billion in direct federal and $2.4 billion in state and local taxes from credit unions and employees through FICA, personal income and excise taxes, among others;
• $3 billion in federal and $1.3 billion in state and local indirect taxes generated by credit unions through purchases of third party contracting goods and supplies; and
• $3.5 billion in federal and $2.7 billion in state and local taxes generated by credit union employee spending in local communities.

Additionally, CUNA notes that credit union members paid $1.6 billion in state and federal income taxes in the most recent federal tax year.