In May, a federal jury ruled that the IRS erroneously levied the unrelated business income tax (UBIT) on three financial products sold by Community First Credit Union.
The Court of Federal Claims ruled that a tax-exempt voluntary employees' beneficiary association (VEBA) recognized income subject to the unrelated business income tax (UBIT) because it exceeded the amount the VEBA could set aside to pay benefits.
Tax Treatment Of Certain Payments To Controlling Organizations Modified Under the Act, payments of certain passive income (including interest, rent, annuities, and royalties) made by an entity that is more than 50 percent controlled by an exempt organization parent are again not subject to unrelated business income tax provided that the payments are determined to be at arm's length, are reflective of fair market value, and are made pursuant to a binding written contract in effect on August 17, 2006, or under a renewal of such contract with substantially similar terms.
The proposals also required that large organizations (those with gross revenues or assets of at least $10 million) obtain certain reviews and unrelated business income tax (UBIT) certifications from independent auditors or counsel, and show that expense allocations complied with Treasury regulations (which require use of reasonable allocation methods).
This report (1) assesses the effect of the Credit Union Membership Access Act on credit union membership and charters, (2) reviews the National Credit Union Administration's (NCUA) efforts to expand services to low- and moderate-income individuals, (3) compares rates offered by credit unions with comparably sized banks, (4) discusses unrelated business income tax issues, and (5) assesses transparency of credit union senior executive compensation.
It also covers exemption issues, unrelated business income tax, the special rules applicable to private foundations, tax rules applicable to unrelated business income, and the tax and reporting rules applicable to political organizations.
