Credit Unions in State of Arizona

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“The credit union is exempt, by statute (internal revenue code section 501(c)(14), from federal income tax. The income taxes topic of the financial accounting standards board (fasb) accounting standards codification clarifies accounting for uncertainty in income taxes reported in the financial statements. The interpretation provides criteria for assessment of individual tax positions and a process for recognition and measurement of uncertain tax positions. Tax positions are evaluated on whether they meet the "more likely than not" standard for sustainability upon examination by tax authorities. The credit union is a state-chartered credit union as defined 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 directly related to its exempt purposes. However, irc section 511 imposes a tax on the unrelated business income (ubi) derived by state-chartered credit unions. Beginning in march 2008, the internal revenue service (irs) released technical advice memorandums (tams) to specific state-chartered credit unions specifying the revenue sources subject to unrelated business income tax (ubit). Ubi may also be subject to tax in certain states. Management has assessed the credit union's activities and any potential federal or state income tax liability and determined that the credit union has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. Additionally, no interest and penalties have been recorded in the accompanying financial statements related to uncertain tax positions. Currently, the 2018, 2017, and 2016 federal income tax returns are open for examination by the irs. The filing years open for examination by the state, if applicable, may be equal to, greater than or less than the years open for examination by the irs. In december 2017, congress passed the tax cut and jobs act of 2017. The provisions of the act change the way certain tax-exempt organizations, including state-chartered credit unions, will report and incur tax on ubi. The provisions impose an excise tax on non-profit executive compensation and increases unrelated business taxable income by disallowing certain benefit deductions. This change is effective for tax periods beginning after december 31, 2017.”