Landmark UBIT Trial Postponed In Colorado
WASHINGTON-A federal judge has delayed the trial date of a Colorado credit union's lawsuit against the IRS over the tax agency's application of the Unrelated Business Income Tax (UBIT).
State-chartered credit unions have been fighting the IRS for decades over what is taxable under UBIT, with credit unions claiming services and products like insurance sales, ATM fees and others are related to the core business of credit unions, and so are exempt from UBIT.
The $1.8-billion Bellco CU filed its suit disputing IRS assessments for its sale of credit life disability insurance, accidental death and disability insurance and revenues it earned from its CFS Financial Services operation and is seeking repayment of $199,000 in back taxes, penalties and interest. Bellco's suit came on the heels of a similar action against the IRS by Community First CU, Madison, Wis. The Bellco case had been set for Aug. 31, 2009. A new date has not been set.
"We have no reason to believe that the judge's action says anything about how this case is likely to turn out. Courts often reschedule trials just to manage their overall workload," said CUNA General Counsel Eric Richard. "We anticipate the credit union party to the case will seek a prompt trial date at the appropriate time."
Much Talk, Little Action In Statehouses On Foreclosures
ST. PAUL, Minn.-Credit unions have been bracing themselves for moratoriums in 2009 on foreclosures, but despite all the rhetoric no state has yet to pass any such legislation. Analysis by American Banker, an affiliate of Credit Union Journal, found that none of the initiatives announced to date, including those in Minnesota, New York, Michigan, and California, have resulted in legislative action. Still, observers expect the foreclosure issue to emerge again in many states next year, when millions more subprime mortgages are poised to reset at higher rates.
Several states, including Georgia, Pennsylvania, and Maryland, gave borrowers more time to work out modified payment plans with their mortgage lenders, and at least a dozen, including Texas, Arizona, and Florida, enacted laws to combat fraud by people claiming to be foreclosure consultants.
However, some lawmakers and industry participants see state-mandated foreclosure moratoriums as doing more harm than good.
Minneosta Gov. Tim Pawlenty, for example vetoed a foreclosure freeze bill, saying it would make mortgages more expensive by forcing lenders to consider the "additional business risk" of nonpaying borrowers when making future loans.
Heather Morton, an analyst at the National Conference of State Legislatures, said lawmakers held off imposing freezes this year to gauge whether other measures, such as increased funding for emergency assistance and loan modification programs, might stave off foreclosures. "States were very active trying to help their constituents without making credit more difficult or shutting down the market altogether," Morton said.
-Katie Kuehner-Hebert
Housing Prices Post Record Decline
NEW YORK-The real estate market remains perplexed over where the bottom might lie after home prices posted another record decline in October, dropping 18% over the same period one year earlier, according to the Case-Shiller index. That index, based on home prices in 20 cities, has now posted losses for a 27 months in a row. In October, 14 of those 20 cities set new price decline records. Experiencing the biggest declines were Phoenix, at 32.7% over one year earlier, Las Vegas (31.7%), San Francisco (31%), Miami (29%), Los Angeles (27.9%), and San Diego (26.7%). Other big cities seeing declines included Atlanta, Seattle and Portland, all of which were down just over 10%. Through October, the 20-City Composite is down 23.4%.
CU Issues 50 BP Dividend
SPRINGFIELD, Mo.-CU Community closed out 2008 with a bonus dividend for its members. Each member will receive as much as an additional 50 basis points on their fourth quarter savings account earnings.
"Contrary to so many businesses in the current economy, we were fortunate to have a good year financially," said Judy Hadsall, President of CU Community. "We are very proud of our financial results and want to share that success with each of our members since they are also our owners. This is a tough time for everyone; we want to do everything we can to help."
