APPLETON, Wis. — The $916 million Community First Credit Union has decided to take on the Internal Revenue Service in court over whether it should be required to pay unrelated business income tax (UBIT) on some of its products.

The CU voluntarily paid $54,000 to the IRS on income it made in 2006 on its credit life and credit disability insurance, and guaranteed auto protection (GAP) insurance. The IRS determined that these products are subject to the tax and Community First disagreed.

“Community First's mission–and that of all credit unions–is to provide financial services to our members on a not-for-profit, cooperative basis. The products at issue here are financial services, and they contribute to the financial stability of the credit union and our members,” said Community First President and CEO Catherine Tierney. “They are well within the purpose of credit unions and should not be taxable.”

Although the CU and the IRS are the only parties to the case, CUNA and the Wisconsin Credit Union League are both backing the effort. At a press conference announcing the litigation, CUNA General Counsel Eric Richard said that all credit unions owe Community First a debt of gratitude for taking the step.