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WASHINGTON — The IRS has publicly released rulings recently in Technical Advice Memoranda stating that credit card interchange fees are not subject to unrelated business income tax.

The IRS released 12 Technical Advice Memoranda June 22, which reiterated some of the IRS’ stands on credit union activities subject to UBIT, but also cleared credit card program interchange fees from coverage. “Making interest-bearing loans to members is a traditional activity of exempt credit unions,” one of the TAMs read. “Credit unions originally made unsecured personal loans to members. Because of changes in the financial marketplace and the expanded needs of financial institutions customers, today all the types of loans made by [the unnamed credit union]–including personal loans to members; first mortgage loans and second-mortgage or home equity loans, secured by residential real estate owned by the members; small business loans; auto loans, secured by the automobile owned by the member whose purchase is financed by the loan; and credit card loans–are recognized as substantially related to the exempt purposes and functions of [the credit union].”

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