Posts tagged ‘IRS’

IRS to credit unions: my bad; Bankers to AGs: let’s make a deal

Newsflash: credit unions are  tax exempt ! Of course, we knew this all along; everyone, that is, except the IRS.

Last  September, some state-chartered credit unions and even some federal ones began to receive notifications from the IRS that they were losing their tax-free status because the form 990’s hadn’t been filed.  The problem is that FCUs don’t have to file form 990’s and that at least some of the state-chartered  credit unions were in states where their regulator filed on their behalf or were in states like New York, where they had to file individually and had done so.

Well, yesterday, both the Credit Union Times and CUNA News Now reported that the IRS had informed  individual credit unions that they received the notices in error because of the way the state returns were processed in the IRS system.  Bottom line:  if you continue to meet your annual filing requirements, you may hold yourself out as tax-exempt.  

As much fun as it is to poke fun at the IRS, state chartered credit unions in New York should, of course, remember that the Banking Department no longer files group 990’s.  You are tax exempt, but not exempt from filing.

Foreclosure Settlement to be Announced

Several major newspaper outlets, including the Wall Street Journal, the New York Times, and the Huffington Post, are reporting that a settlement stemming from robo-signing allegations will be announced today or tomorrow, ending negotiations between state attorneys general and the nation’s five largest servicers who together are responsible for 55% of mortgages.  The $26 billion settlement will give credits to the banks for providing principle reductions on underwater mortgages and compensate home owners who lost their homes as a result of shoddy paperwork in foreclosure actions.  The actual amount of money spent by the banks could actually be much larger.  Here are some initial thoughts.

  • The agreement is a nice victory for Eric Schneiderman, New York’s AG, since he gets to sign onto the deal and still sue the banks over the MERS system;
  • Economists are split as to how big an impact the deal could have, but I believe the principal reduction aspect is the only way to really fix the housing market;
  • It will be interesting to see if the Obama Administration successfully pressures Fannie and Freddie to introduce a similar principle reduction program for its mortgages.  Remember that there is no way that Congress is going to take action on housing this year, so this is the only hope we have to address the housing market in any aggressive way.

February 9, 2012 at 7:17 am Leave a comment

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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