Employees of federal credit unions don't have to pay hotel occupancy taxes when attending business meetings, a U.S. judge has ruled in California.
In a summary judgment Nov. 14, Judge Edward Rafeedie of the Central District of California upheld the California Credit Union League's argument that the employees are exempt under the Federal Credit Union Act.
The judge also indicated that he would order the City of Anaheim to refund taxes it had charged during credit union conventions held there over the past two years, an amount that league president David Chatfield said could run "into six figures."
The reimbursement would be an extra treat, because the league asked only that the tax not be charged in the future, Mr. Chatfield said.
Judge Rafeedie still has to issue a written ruling, which is expected later this month.
The league filed suit in September after getting complaints from its federally chartered members.
"We decided we had to bring this to a halt," Mr. Chatfield said. "We will aggressively protect the tax-exempt status of credit unions."
The league based its argument on a section of the 1934 Act that exempts federal credit unions from any sales or usage tax in any jurisdiction.
The exemption doesn't extend to state-chartered credit unions, Mr. Chatfield said.
The league plans to use the decision to fight other cities that impose a hotel occupancy tax, such as Monterey, Mr. Chatfield said.
Mr. Chatfield said Anaheim has indicated it will appeal the case. But Moses W. Johnson IV, deputy city attorney, said it is awaiting the judge's written decision before deciding whether to appeal to the U.S. Ninth Circuit Court of Appeals.
League officials welcome a rematch in hopes of establishing a precedent against the tax in an appellate court.
"We're hoping they appeal because the facts of the case aren't going to change and we'll trounce them," said Joseph McDonald, general counsel for the league.
