May 20, 2009 APPLETON, WI – Community First Credit Union said a federal jury’s decision confirming that several of its key products are substantially related to the credit union’s mission is a victory for its own members and millions of credit union members nationwide. The jury found the Internal Revenue Service was wrong to deem the products as unrelated to the credit union’s primary business purpose.
The suit, originally filed in January of 2008, sought the refund of taxes paid on income from the sale of credit life and credit disability insurance, and guaranteed auto protection (GAP) insurance in 2006. Community First disagreed with an IRS Tax Advisory Memorandum (TAM) which claimed that these products fell outside the credit union’s main mission and were therefore subject to unrelated business income tax (UBIT).
Community First contended that the revenue from sale of the products is "substantially related" to the purposes and functions of a tax-exempt, state-chartered credit union. Wisconsin law sets forth three purposes of a credit union: "to encourage thrift among its members, create a source of credit at a fair and reasonable cost, and provide an opportunity for its members to improve their economic and social conditions."
Demonstrating the relationship of these products to the credit union’s mission was central to Community First’s case which included testimony by Community First founder Maurice Dresang, President and CEO Catherine Tierney and Senior Vice President of Branch Operations Kevin Hartz as well as two Community First Credit Union members who benefited from these products.
“We are gratified by the jury’s decision. We have said from the start that this case is about more than just an issue of money; it’s a matter of principle,” Tierney emphasized. “This is about the credit union mission. Unlike a traditional bank, credit unions are owned by their members and are not for profit financial cooperatives. This issue goes to the heart of preserving the unique services that credit unions provide to millions of members every day across the nation.”
The verdict was returned following 4 days of testimony and less than two hours of deliberation by the eight-person jury. The trial was held May 11-14, in the U.S. District Court for the Eastern District of Wisconsin with Judge William Griesbach presiding.
Contact Information:
Catherine J Tierney
President/CEO
Community First Credit Union
830-7200
cathie.tierney@communityfirstcu.org
|
