By Ray Birch
WASHINGTON—To defend the credit union tax exemption, Anthony Hernandez says the movement must launch a coordinated campaign reminiscent of the H.R. 1151 effort, when credit unions and industry partners united to push Congress to pass the Credit Union Membership Access Act.
That’s what’s needed, and not a moment too soon, said the president and CEO of the Defense Credit Union Council as the budget bill heads toward markup by Congress.
Hernandez emphasized that DCUC has been sounding the alarm for some time over the mounting threat to the movement’s tax exemption.
Anthony Hernandez
“In August of 2024, we recognized there was real work to be done, even though the finish line was far ahead. We knew there was a threat growing, maybe one unlike we’d seen before. We knew we had to get to work,” Hernandez said. “Last year DCUC and our member credit unions opposed a legislative effort to remove the credit union membership requirement from the Federal Credit Union Act to allow a credit union to operate a community bank. That was an important battle credit unions won that would have had major implications in this year’s fight to protect the tax-exemption.”
Hernandez said he is uncertain if many people in the industry recognized then that the tax fight was rising in intensity.
“The 2025 NDAA was signed into law on Dec. 23, 2024. If that amendment had passed, the membership requirement in the Federal Credit Union Act would be severely weakened,” Hernandez said. “If that happened, this year’s tax battle would be much more difficult. The membership requirement is what separates credit unions from banks. Toss that aside and this tax battle we’re fighting would already be over.”
Hernandez noted that DCUC recognized early on that the Tax Cuts and Jobs Act would expire this year and anticipated that bankers would intensify their efforts to push for taxing credit unions.
Responding To Banker Attacks
“Last year, we were not sure what the overall industry strategy was going to be in this fight, but we knew we needed to respond,” Hernandez said. “So, we started responding to banker attacks. We have been aggressively reaching out to all members of Congress—especially key budget bill decision makers—via letters, grassroots campaigns, and providing talking points for in-person meetings. We launched a targeted digital ad campaign to all members of Congress in March and we just began a geofencing video campaign to reach policymakers and legislators throughout the Capital region. It’s been a very large, detailed and dedicated effort based on a deliberate strategy. This strategy is largely unchanged.
“However, a few months ago, I was advised by several league presidents to tone down our efforts, to keep quiet, and avoid drawing attention to credit unions. Yet, banks were already tearing us down on Capitol Hill. I was also advised by the same group to save our efforts to preserve the tax exemption until sometime in September of 2025—which is still months away,” continued Hernandez. “However, I noticed others have come around to our strategy which is good for the industry since it is now or never.”
So, what changed?
Hernandez contended “reality set in” across the industry when the credit union tax exemption was included on a House GOP document that carried a list of “pay-fors” to support the budget bill. CUToday.info was the first to report the document was being circulated among Republicans.
“I still recall looking at the copy of that House document. Staring at it and seeing credit unions listed was not a good sign,” said Hernandez.
What is needed now, insisted Hernandez, is unity among credit union voices.
“This past week a large number of credit union organizations and system partners—including DCUC and America’s Credit Unions—sent a joint letter to Congress highlighting the need to preserve the credit union tax exemption, and detailing the benefits credit unions provide to their members, communities and overall economy. I am proud of the industry for doing that.”
That was a coordinated message that came from many different perspectives, many different voices, explained Hernandez.
“For example, one of the groups signing on to the letter was the National Council of Firefighter Credit Unions,” he said. “These are our nation's firefighters that have formed credit unions and have a unique perspective on the tax exemption bill. Who wants to tax firefighters?”
Nussle Outlines ACU Strategy
In a recent CUToday.info report, ACU President and CEO Jim Nussle outlined the trade association’s efforts to preserve the CU tax status, noting ACU began meeting with new members of Congress in November, and then rolled out its Don’t Tax My Credit Union Campaign early this year, among other actions. He also stated it’s time to intensify efforts to prevent the industry from getting taxed.
“I would agree and say in the last two weeks that we've seen a lot of activity starting to flow,” said Hernandez about the entire industry’s efforts to preserve the tax exemption. "Collaboration is crucial now more than ever. There is no time to exclude anyone from efforts to engage with Congress. We need more voices. I’d say, right now, this is the fight we've been expecting all along, and it’s a difficult one. The threat to the CU tax exemption is real.”
Hernandez reminded that within the next ten days Congress will start to mark up the tax bill.
We’ve got less than a week, so we have to make this happen now,” concluded Hernandez. “We need a collaborated effort among credit unions that we haven’t seen since maybe H.R. 1151. We need to fully mobilize and get our messages out. Make the phone calls, send the letters, send the postcards…I know several leagues are in town this week and are meeting with their members. This is all interconnected, so, let’s keep up the pace!”