Hatch had asked the agency to begin requiring the reporting, contending the credit union tax exemption was outdated and that there is little difference between credit unions and banks.

Instead, Kautter simply said the IRS favors transparency and agrees that credit unions should promote their intended purpose.

"The IRS response really doesn't say anything," John McKechnie, senior partner at Total Spectrum, said. "Which is fine, although I would have much preferred a definitive statement from them along the lines that there is adequate transparency already. And that there is no policy justification for an additional regulatory burden. Those answers would've been ideal."

However, Ryan Donovan, CUNA's chief advocacy officer, said he is fine with the IRS's answer.

"We think the letter speaks for itself and we appreciate the IRS responding to Senator Hatch's concerns," he said. "We maintain that the existing policy is appropriate."

Hatch's original request would have accomplished little, NAFCU President/CEO B. Dan Berger said. "Although NAFCU and our members support transparency, requiring credit unions to file additional paperwork is unlikely to increase transparency in a material manner and would only serve to increase the already staggering regulatory burden imposed on credit unions," he said.

With the issue unresolved, bankers will renew their fight to repeal the credit union tax exemption during the next Congress, Chris Cole, EVP and senior regulatory counsel at the Independent Community Bankers of America, said.

"The IRS doesn't want to do what Sen. Hatch has proposed," he said. "The IRS is dragging its feet.

Any changes to the credit union tax exemption or reporting requirements will take legislation, he said. He added, however, that cannot be accomplished this year.

"This being an election year, some legislators don't want to get into this right now," he said.

However, Dennis Dollar, principal partner at Dollar Associates, said he believes the IRS is continuing to examine the issue.

The IRS is charged by Congress with collecting the new 21% excise tax on compensation above $1 million for not-for-profit organizations, including credit unions, Dollar, a former chairman of the NCUA board, said.

He added it makes sense that the IRS already is looking at how to gather the information needed to enforce that law.

"If you read between the lines of their letter to Senator Hatch, it was that any decision on requiring 990s for federal credit unions will be based upon statutory requirements imposed by the entire Congress' action on the tax law – not the pressure from one senator," Dollar said. "If they eventually have to require 990s for enforcing the excise tax law, they don't want it to be viewed as caving to political pressure."