Credit Union Times previously reported that three other state regulators–Virginia, Wisconsin, and Missouri–have recently discontinued the practice as well, but California DFI also said that regulators in Arizona, Michigan, Washington, Texas, Oklahoma, Tennessee, and Kansas recently ceased filing consolidated forms for their state-chartered credit unions.

NASCUS is currently in the process of updating its Profile, which provides a wide variety of information on state chartered credit unions and their regulators including which ones are filing consolidated IRS Form 990s, as well as the state leagues.

Arnould noted that California Governor Arnold Schwarzenegger's administration has a policy against placing additional paperwork burdens on small and mid-size businesses. DFI has extensive appeals options and the league is "reviewing our options right now," he said.

Having to file individual 990s is just one more filing on top of many others credit unions have to prepare. "It is enough for some smaller credit unions to throw up their hands and say, 'We're done!'" Arnould explained.

CCUL is very active in educating its members and, in case the league is unsuccessful, CCUL Credit Union Development Project Manager Rita Fillingane said the league is "exploring all the various avenues" to educate its members on the 990. As to the burden on credit unions to file individual 990s, she said, "We don't necessarily know that. It's something we're going to look at."

Patelco Credit Union Chief Financial Officer Scott Waite said the group filing was also a defense to not filing a 990T because you could not file it unless filing an individual 990. "Now that filing is falling by the wayside…there's an obligation now to consider the 990T," he said. The 990T is for reporting unrelated business income tax.

Representatives from the California league said they had not heard any correlation from the state regulator between discontinuing the consolidated 990 filing and UBIT. Collver said he did not know how many California credit unions file 990Ts but anecdotally, it does not seem like very many.

According to NASCUS' 2005-2006 Profile, IRS Technical Advice Memoranda were previously issued to California credit unions regarding activities subject to the UBIT including credit related insurance, travel agency and brokerage services, and nonmember ATM surcharges.

Waite also pointed out, "New for those that haven't filed individually before, it's open to public inspection." That would include individual executive's compensation. However, he added, "I don't think there's anything that credit unions should feel shouldn't be transparent."

The Pennsylvania Credit Union Association has also announced it will discontinue consolidated filings for the 2007 tax year. "This year, our tax counsel highlighted several issues which compelled our Board to conclude it would be more prudent for the Association to step aside as the preparer of the group return," PCUA President/CEO Jim McCormack said.

PCUA Senior Vice President of Communications and Marketing Mike Wishnow further explained, "Why we decided to stop was that the IRS made it very clear to us that they frown upon the group filing." Additionally, the IRS began requiring credit unions to file their 990s electronically, which requires that specific data be input for the compensation section. He stressed that the 990 filing is strictly informational and "not a terribly difficult filing."

On the other hand, Waite commented, "For the vast majority of credit unions, the form is more complicated than they want to prepare themselves."

PCUA will be offering assistance to members individually if needed, Wishnow said. "Their preference would be we continue filing it but if the IRS is going to require it, it is what it is," he said was his sense of members' attitudes. With most other nonprofits and cooperatives filing individual 990s and disclosing compensation information, he said, "I think most figured it was only a matter of time."

The Maine Credit Union League is the last known league to be offering members consolidated 990 filings. President John Murphy said they are aware of the environment and are still reviewing whether or not the league will continue to file the 990s. He expects to make an announcement before December.

Patelco's Waite also noted that credit unions will need to have the information handy if members request it when filing individual 990s. He said if the information is requested in person, it must be delivered the same business day. If the request comes in writing, they have 30 days to comply, according to Waite. Credit unions could even choose to post the information on their Web site and advise members and the general public where they can download it.

Considering credit unions' unique shared branching practices, disclosure could pose some logistical issues, but they should not be too difficult to surmount.

However, Patelco–along with CUNA and NASCUS (CU Times, Sept. 26, 2007)–have written the IRS regarding its proposed revised 990 form stating that it might not be appropriate for state-chartered credit unions. "Some non-profits don't have as much transparency and regulatory reporting like credit unions have," Waite said. He said Patelco would like to see a form tailored to credit unions.

NASCUS Director of Communications and Public Affairs Kate Hartig commented, "State charters are the only credit unions required to file 990s. Because federal charters are not required to file 990s, it may be considered a disadvantage to state charters." She also pointed to NASCUS' comment letter to IRS on the revised form noting that the 990 has "limited application to credit unions."

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