HARRISBURG, Pa. – In the latest chapter of a case that dates back to 2004, the Pennsylvania Supreme Court last week agreed to accept an appeal filed by the Pennsylvania Bankers Association and area banks to review the tax status of credit unions in Pennsylvania.
The case is tied to the favorable ruling earlier this year by the Pennsylvania Commonwealth Court in favor of the Pennsylvania Banking Department, Freedom CU, TruMark Financial CU and the Pennsylvania Credit Union Association that found the credit union tax status is consistent with the Pennsylvania constitution.
In an order filed March 1, the Commonwealth Court affirmed the five-county field of membership including Bucks, Chester, Delaware, Philadelphia and Montgomery counties for Freedom and TruMark Financial credit unions that was initially by Pennsylvania Secretary of Banking William Schenck.
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The bankers asked the Pennsylvania Supreme Court to review the FOM issue as well, but the higher court has not indicated whether it will hear the FOM case or not.
When the taxation case was first heard by the Commonwealth Court, the bankers raised four taxation-related questions. The Commonwealth Court tossed out three of the four questions. On the fourth concerning the issue of uniformity of taxation-the banks contend there's no difference between mutually-owned banks that pay taxes and credit unions, and therefore CUs should be taxed. The Commonwealth Court voted five to two to ask for more information before deciding on the case, and PCUA Senior Vice President Communications and Marketing Mike Wishnow said two of the judges indicated they didn't need more information, but were ready to dismiss that fourth point immediately.
Wishnow said both the bankers and credit unions have filed briefs with the Commonwealth Court and, "we're hoping the case will move forward and some final decision will be reached at that level."
He adds though, that he's "confident" if the Commonwealth Court dismisses the fourth taxation issue as well, that the bankers will appeal that one to the state Supreme Court.
According to the PCUA, "the substantive issue under review is whether the credit union taxing scheme established by the Pennsylvania Credit Union Code is consistent with the taxation provisions of the Pennsylvania constitution."
Wishnow said, "We welcome the opportunity to present our case to the Pennsylvania Supreme Court. We feel the Pennsylvania Banking Department ruled properly in the initial phase and the Commonwealth Court ruled properly at the appellate level. This is yet another banker attack that we as credit unions will vigorously defend against whether it's in the courts or the legislature. It's become a fact of life for the credit union industry."
PCUA Executive Vice President/General Counsel Rick Wargo agreed, saying, "As an association, we will continue to vigorously advocate for all of Pennsylvania's credit unions. It is important to recognize that this is a direct challenge to credit unions' tax exemption being heard by the Pennsylvania Supreme Court." [email protected]
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