CUs Have More Time On Tax Accounting Disclosure
NORWALK, Conn. -- The Financial Accounting Standards Board has given state chartered CUs more time to evaluate, estimate, and disclose their potential tax liabilities for unrelated business activities on their balance sheets.
Credit unions had previously been expected to account for unrelated business income tax on business conducted in 2007, according to an earlier FASB ruling, but now will only have to do so for business conducted this year. Credit unions had pointed out that the IRS had not finalized its understanding on tax liabilities for state chartered credit unions and that CUs had not had enough time to include the information on their financial statements for 2007.
The deferment means that state-chartered CUs will not have to estimate their potential UBIT for 2007. FASB had ruled that nonpublic entities like CUs would not be able to defer listing their real and potential tax liabilities. Credit unions are still pressing FASB for clarification on whether they will have to start including potential tax liabilities in quarterly reports to their regulators.
The issue of just what is or is not considered an unrelated business activity for a state chartered credit union is currently the subject of a federal court case.