It’s important to understand how credit union are different and unique.
Credit unions pay taxes in the forms of sales taxes, payroll taxes, and property taxes. However, credit unions are exempt from federal income taxes. This exemption was established in 1937, affirmed by statute in 1951, and re-affirmed in 1998 in H.R. 1151, the Credit Union Membership Access Act, which states:
“Credit unions, unlike many other participants in the financial services market, are exempt from Federal and most State taxes because credit unions are member-owned, democratically operated, not-for- profit organizations generally managed by volunteer boards of directors and because they have the specified mission of meeting the credit and savings needs of consumers, especially persons of modest means.”
Credit unions are in existence to serve their members, not to make money. Unlike other financial institutions, credit unions do not pay dividends or issue stock to stockholders.
Members at credit unions have equal ownership, and each member has one vote. Customers are both owners and members.
In accordance with federal statute, credit unions can’t serve the general public. People can qualify for membership in a variety of ways including through their employer, through a church or social group, or through a community charter.
Every credit union is governed by its own voluntary board of directors. The membership elects the board’s members.