MILWAUKEE — The Wisconsin Bankers Association has attacked the $916 million Community First Credit Union for its decision to file a lawsuit against the IRS over its unrelated business income taxes.
In an opinion piece that appeared in the Small Business Times, a business journal published in Milwaukee, WBA CEO Kurt Bauer charged that the CU's lawsuit represents an attempt by an almost billion dollar institution to escape paying even a little tax.
"The Appleton-based financial institution with nearly $1 billion in total assets is suing the IRS for $54,604 in unrelated business income taxes it was forced to pay in 2006," Bauer wrote. "That same year, Community First posted profits of $8.4 million and spent a whopping $550,253 on travel and conferences for its executives and board of directors."
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Bauer went on to charge that the "credit union industry's corporate tax subsidy" costs Wisconsin taxpayers $40 million annually and that by then end of 2008 Wisconsin could have six CUs of more than $1 billion in assets.
But the Wisconsin Credit Union League came to the defense of Community First. Responding to a press release from the bankers that made similar points, Brett Thompson, league CEO, pointed out that the Wisconsin credit unions pay taxes.
"Wisconsin credit unions pay millions in taxes annually," he said. "The lawsuit is not about money, but serving members."
"Like all credit unions, Community First exists to offer financial products that contribute to the financial well-being of its member-owners," Thompson continued. "The services for which Community First paid the unrelated business income tax are in fact central to that mission–and to the mission of all credit unions who offer them. It's about preserving the ideals of credit unions as not-for-profit, member-owned cooperatives," he added.
A prepared statement from the league also noted that Wisconsin bankers have not been without tax controversy. Thompson contended that more than 87 Wisconsin banks challenged the state Department of Revenue over the past few years–ultimately reaching settlements–when the agency claimed they had been using subsidiaries with no purpose other than to avoid paying state taxes, adding that "some of the state's largest banks paid no taxes at all."
"That's skirting taxes, period, not seeking a refund on an overpayment, as is the case with the credit union," Thompson said. "The WBA would do well to heed the adage to refrain from throwing stones when you live in a glass house."
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