Vibrant Credit Union

“Vibrant credit union collects amounts from members with real estate loans each month via their contractual payment schedule. These funds are held in escrow until they need to be disbursed in accordance with the escrow instructions for each member. Amounts held in escrow are for property taxes and homeowner's insurance.”

“The credit union is exempt from income taxes under provisions of the internal revenue code and states of illinois and iowa tax laws. Management has evaluated the credit union's tax positions and concluded that they have taken no uncertain tax positions that would require adjustments to the financial statements. Generally, the credit union is no longer subject to u.s. Federal or state and local income tax examinations by tax authorities for years before 2013. The credit union is exempt from most federal, state and local income taxes under the provisions of the internal revenue code and state tax laws. The credit union is a state-chartered credit union as described in internal revenue code (irc) section 501(c)(14). As such, the credit union is exempt from federal taxation of income derived from the performance of activities that are in furtherance of its exempt purposes. However, irc section 511 imposes a tax on the unrelated business income (as defined in section 512) derived by state-chartered credit unions. Many states have similar laws. The specific application of section 512 to the various activities conducted by state-chartered credit unions has been an issue for many years. In 2007, the internal revenue service (irs) issued a series of technical advice memoranda (tam) to a number of state-chartered credit unions located throughout the country. In these tams, the irs ruled certain products and services to be subject to taxation as unrelated business income. Although these tams have no precedential value, they set forth the irs' position that certain sources of income are not related to the exempt purpose of a state-chartered credit union and are subject to unrelated business income tax (ubit). However, court cases have ruled in favor of credit unions and concluded that the sale of certain insurance products and the sale of financial products and services to members are exempt from unrelated business income tax. In light of the tams and court cases, the credit union has assessed its activities and any potential federal or state income tax liability. In the opinion of management, any liability arising from federal or state taxation of activities deemed to be unrelated to its exempt purpose is not expected to have a material effect on the credit union's financial condition or results of operation. The credit union began filing income tax returns for its unrelated business income beginning with tax year ended december 31, 2009. However, the taxing authorities have the ability to assess taxes, penalties and interest for any years prior to 2009 for which no tax return was filed.”