Federal credit unions want assurance that they won’t be left out of a tax break available to employers that provide paid sick and family medical leave to their employees during the coronavirus pandemic.
A recently enacted payroll tax credit for employers that provide the temporarily mandated leave should be available to federal credit unions, according to the National Association of Federally-Insured Credit Unions (NAFCU).
But federal credit unions’ eligibility is uncertain because of statutory language that makes the credit unavailable to government instrumentalities. For purposes of federal tax law, federal credit unions are considered federal instrumentalities, NAFCU’s B. Dan Berger noted in an April 29 letter to Treasury Secretary Steven Mnuchin.
NAFCU believes Congress didn’t intend to exclude federal credit unions from receiving the credit while providing it to state-chartered credit unions, Berger said.
“To create such a bifurcation would arbitrarily disadvantage a large portion of the credit union industry that could otherwise leverage federal relief to better aid members and employees affected by the public health and economic crises,” Berger said. “It would also create a divergent set of tax policies for institutions that otherwise receive the same practical treatment with respect to federal tax obligations.”
Treasury should “implement these laws as Congress intended and not prevent federal credit unions from obtaining this payroll tax credit for offering their employees paid leave,” Berger concluded.
In recent weeks, other groups have asked that public employers receive the credit, established by the Families First Coronavirus Response Act (P.L. 116-127).
In March, groups representing state and local governments told congressional leaders that omitting public employers from the credit would devastate local communities. Organizations representing higher education have raised concerns about excluding public colleges and universities from the credit.
More than 70 House members signed an April 13 letter asking House and Senate leaders to make state and local governments eligible for the credit.