ALEXANDRIA, Va.-According to a recent Letter to Federal Credit Unions, NCUA gives federal credit unions the authority to reimburse volunteer board members for reasonable travel expense, but that does not mean the IRS is not going to get their hands on it. NCUA Letter to Federal Credit Unions 05-FCU-02 states that federal credit unions may reimburse volunteer officials and one guest "for reasonable and proper costs incurred in carrying out official responsibilities. The reimbursement rule also requires that payments must be determined to be necessary or appropriate in carrying out official business and are in accordance with written policies and procedures, including documentation requirements." NCUA's reimbursement rule specifically excludes travel reimbursement for a volunteer official and one guest from the definition of "compensation." To be in compliance with the rule, the credit union's board had to adopt a policy outlining that it will pay for appropriate costs associated with carrying out official duties. "While NCUA's rule does not address tax matters, federal credit unions must comply with any applicable Internal Revenue Service (IRS) reporting requirements." the new guidance continued. "Travel payments, while permissible under NCUA's reimbursement rule, nevertheless may be taxable income to the recipient. The IRS definition of taxable income differs from NCUA's definition of compensation." The agency advised federal credit unions with this policy and their officials to consult tax professionals for advice on their specific situations.