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July 26, 2011

MOAA urges lawmakers on tax exemption

July 27, 2011 – As lawmakers continue working toward a deal to resolve the nation's debt ceiling debate, the Military Officers Association of America is urging them to be mindful of the role credit unions play in the financial services industry and preserve the institutions' tax exempt status.

In a letter Monday to the House Ways and Means as well the Senate Finance Committees, MOAA reminded the lawmakers that credit unions' tax exempt status derives from the fact that they are not-for-profit financial institutions that organize without capital stock. Their not-for-profit status, MOAA maintains, allows credit unions to focus more on providing services and financial education to military servicemembers and their families.

A prime example the group cited was the response of military credit unions to the potential government shutdown in April and the anticipated pay stoppage for military members. Military credit unions prepared to offer members low and often no-interest loans. In addition, some were ready to delay payments on loan and credit products. Some credit unions pledged to continue direct deposits for military members.

While acknowledging the weight of the fiscal challenges the nation is facing, MOAA told the lawmakers that 93 million credit union members, including millions of military servicemembers and their families, would face a "de facto tax increase" if the credit union tax exemption were eliminated.