For more information: 
Rick Uhlmann 608/231-8940 rick.uhlmann@cunamutual.com
Phil Tschudy 608/231-7188 philip.tschudy@cunamutual.com

Aug. 10, 2007

Credit Unions Asked to Step Forward to Challenge IRS on UBIT
CU Plaintiffs Needed to Test Taxing Agency in Courts, NASCUS Attendees Told

FORT LAUDERDALE, Fla. – If state-chartered credit unions are going to rid themselves of the Unrelated Business Income Tax (UBIT) threat, it’s going to require some of them to step forward in a court challenge to the IRS, a national leader on the taxation issue told attendees of the NASCUS State System Summit on Friday.

Larry Blanchard, senior vice president, CUNA Mutual Group, and chair of the industry’s UBIT Steering Committee, said the steering committee has tried to reach an administrative solution to the issue, and will continue to work with the IRS to change its decision. He added significant progress was made in getting the IRS to back off the inclusion of debit and credit card interchange fees, checking printing and collateral protection insurance, but the likelihood of the agency changing its mind altogether on taxation is slim.  “The IRS has reached some wrong conclusions on credit union activities and the next step is to seek redress through the courts and challenge the agency’s misguided reasoning. It will take credit unions’ cooperation for it to be successful.

“What we need is for credit unions to step forward and volunteer to be plaintiffs in a case against the IRS. Some have already stepped forward, but we need others,” Blanchard said. The steering committee, comprised of representatives from NASCUS, CUNA, AACUL and CUNA Mutual, is seeking suitable candidates to become plaintiffs.

Blanchard, a key industry driver in the grassroots H.R. 1151 campaign, said a credit union’s membership composition, its reputation and philosophy of serving members and its level of income will be weighed in determining its suitability as a plaintiff. “We need multiple plaintiffs to step forward for maximum flexibility as we put our case together,” he said, adding that the steering committee believes its legal position on the issues “is strong.”

The IRS has identified a number of financial products provided to members by state-chartered credit unions that it says are subject to UBIT. Specifically cited were securities and investment products, credit life and disability insurance, accidental death and dismemberment insurance, car warranties, and guaranteed auto protection (GAP) insurance.

“It will take a united front to beat this threat to credit unions. If you’re mad as heck and don’t want to take it anymore, contact us.” Blanchard said credit unions interested in becoming plaintiffs should contact NASCUS, CUNA, AACUL or CUNA Mutual. He added the credit union plaintiffs chosen to partner with the UBIT Steering Committee would not bear the costs of litigation.

CUNA Mutual Group is the leading provider of financial products and services to credit unions and their members worldwide. More information on the company is available at www.cunamutual.com.