John McKechnie, senior partner, Total Spectrum, Washington
John McKechnie, credit union consultant and partner at Total Spectrum
You’re right to ask these questions now, in the first inning of what is going to be a nine inning (or more) game.
Credit union friends on Capitol Hill have consistently said two things when tax reform was being drafted: first, the policy arguments for why credit unions are tax exempt make sense to most in Congress; they buy what we’re selling. That’s the main reason why we’re untouched so far. Second, Members of Congress counsel vigilance. They understand that the banks are relentless in their attacks, and realize that this is a once-in-a-generation chance for them to get at credit unions. It would be stunning if the banks DON’T try last-ditch efforts to get an amendment offered. Yes, they’ve failed to win the argument thus far. But this is a process, one that requires the credit union lobby to pay close attention to every development.
Besides the statutory exemption, credit unions (both state and federally chartered) should be watchful on the Unrelated Business Income Tax issue. This has always had the potential to be a Trojan Horse, and there are rumored changes to UBIT being looked at, particularly by the Senate Finance Committee.