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Banks are critical of credit unions' tax-exempt status in Oklahoma

Bankers in Oklahoma criticize tax advantages of nonprofit credit unions.
by Brianna Bailey Published: April 9, 2013
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The American Bankers Association report specifically targets Tinker Federal Credit Union, the state's largest credit union. With $2.9 billion in assets, Tinker Federal is larger than 99 percent of all Oklahoma-based banks, the report said.

The report claims that if it were a bank, Tinker Federal would have paid $6.1 million in taxes in 2012.

Stratton said while Tinker Federal does not pay state and federal taxes, its members pay taxes on dividends they receive from the credit union.

While credit unions use income to pay dividends and increase their lending base for members, a bank's profits go to increase the wealth of its shareholders, said Gary Jones, president of the Credit Union Association of Oklahoma.

Although credit unions are tax-exempt, many Oklahoma banks are organized as S corporations for tax purposes, allowing them to avoid paying federal income taxes, Jones said. Instead, shareholders in banks organized this way divide a bank's tax liability, paying a lower tax rate in some cases.

“Although they are fussing about the advantages and benefits we get, I have yet to see any banks trying to convert to a credit union,” Jones said. “It suggests they kind of like keeping their profits.”

by Brianna Bailey
Business Writer
Brianna Bailey has lived in Idaho, Germany and Southern California, but Oklahoma is her adopted home. She has a bachelor's degree in Journalism from the Univerisity of Oklahoma and has worked at several newspapers in Oklahoma and Southern...
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