Defining Credit Unions in the Upcoming Income Tax Debate, by Guy Messick

It looks like Congress will put the Tax Code in play and while it is unlikely the credit union income tax exemption is at risk, credit unions cannot take this for granted.   We must be careful not to let banks define credit unions when they lobby Congress. 

Credit unions are voluntary associations of people who organize a cooperative association called a credit union to pool their money to make loans to each other and the interest from the loans pays the depositors a modest return.  The credit unions, as non-profit cooperative associations, are governed by directors elected by the members and the directors hire professionals to manage the credit unions in the deposit taking and loan making functions.  There are no shareholders seeking a profit or management holding equity.  In a credit union there is no us or them, it is only us, people helping people.   Credit union members pay income taxes on the interest paid to them by the credit union.  To impose an income tax on the members through their cooperative association is double taxation on the members (called voters by politicians).

Credit unions are not separate from the members.  Credit unions are the members and the members are the credit union.   Credit unions are just the means for the members to organize and operate as a cooperative association.   This is the true difference between banks and credit unions and why they should be treated differently on income tax.   Taxing the members once on the individual tax returns for interest earned is fair.   Taxing the members once on the individual tax returns and once again through their cooperative non-profit association called a credit union is not fair.

Be a broken record on this point and the message will get through.

About the Author: 
Guy A, Messick, The CUSO Guru, is an attorney with Messick, Lauer & Smit, PC in Media, Pennsylvania and General Counsel to

He can be reached at 610-891-9000 or