Lawyers representing nationwide shared branching networks are working with CUNA lawyers to respond to a recent move from the Internal Revenue Service that could make income from shared branching taxable under unrelated business income tax.

The move came in the form of a technical advice memorandum from the agency.

"We are aware of the TAM," said Craig Beach, vice president of marketing for CO-OP Shared Branching, the shared branching affiliate of CO-OP Financial Services. "We are taking this from the point of view of all shared branching so our lawyers with lawyers from CUNA are trying to figure out what this might mean for shared branching acquirers."

Taking the issue from a network perspective means that CO-OP Financial Services is working with Financial Service Centers Cooperative along with CUNA on the issue.

One of the issues being studied is how much income this might represent, since most credit unions that take in some money acquiring shared branching transactions usually pay some out also when their members use other credit union shared branches.

UBIT has been levied on state chartered credit unions by the IRS on the grounds that some activities have been unrelated to work as credit unions and therefore not covered by their tax exemption. The IRS application of UBIT to credit unions is currently under challenge in court.

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