UBIT, UBIT, UBIT…no it's not a bad imitation of a frog croaking, it's the IRS' Unrelated Business Income Tax and it's about to move to center stage.
The IRS has recently advised that income from credit insurance products and nonmember ATM fees is subject to UBIT! Not good news for credit unions to say the least.
What is UBIT? It's a tax on nonprofits on income that is considered to be substantially unrelated to the organization's primary mission. Interestingly, it only applies to state chartered credit unions–federal charters are exempt.
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