Paul: IRS to Audit Six to Eight Colorado Credit Unions for UBIT

DENVER – Approximately six to eight credit unions are targeted for auditing by the IRS for Unrelated Business Income Tax, according to Colorado Financial Services Commissioner David Paul. “My staff visited with them (the IRS) a bit about what credit unions are, how they’re organized, operated and so forth. We gave them access as we’re required to do to call reports,” said Paul. Federal credit unions are exempt from all federal taxes and thus not subject to UBIT. For that, Paul, and others are concerned about this as a dual chartering issue. Paul said this is the first time in his 15 years regulating CUs in Colorado that the IRS has audited CUs for UBIT, and from what he knew it was the first time ever. He also noted that he hoped Colorado’s recently passed incidental powers regulation will provide state charters there with some support, though that was not the intention of the regulation. “We know everything is subject to IRS interpretation. They don’t have to give that regulation any particular credence,” said Paul. [email protected]