Pennsylvania High Court To Hear CU TaxChallenge

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HARRISBURG, Pa. - (06/08/06) – The state Supreme Courtannounced Wednesday it will review the bankers challenge of the taxexemption for credit unions. In an unusual move, the state HighCourt agreed to hear one of the four arguments put forward by thePennsylvania Bankers Association challenging the tax exemption,while the bankers pursue the remainder of the arguments in thelower court. “We are encouraged that the court here inPennsylvania will hear this question of taxation. It is one that wethink should be given greater consideration,” said JamesBiery, president of the state bankers group. The Supreme Courtagreed to review the bankers argument that the state constitutiondoes not give express authority to the legislature to set specificexemptions, which set the credit union exemption from state taxesdecades ago. The state Department of Revenue, which is a defendantin the case, along with the Department of Banking, TruMark CU andFreedom CU, estimates that credit unions save as much as $20million in various taxes by virtue of their tax exemption. MichaelWishnow, chief spokesman for the Pennsylvania CU Association, saidhe is confident the High Court will agree with the lower court,which rejected the bankers’ argument. “We arereasonably confident at the end of the day it will rule in ourfavor,” he told The Credit Union Journal. The lower court hasyet to rule on the bankers’ other tax arguments, such as theexemption violates state and federal statues on uniformity forsimilar institutions; or that large, diversified credit unions haveoutgrown the original purpose of the tax exemption.

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