Financial Institutions Tax and Accounting Insights
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    Financial Institutions Tax and Accounting Insights

    A wide range of information channels to provide you with up-to-date accounting and tax information.

    The Financial Institutions group reviews a wide range of information channels to provide you with up-to-date accounting and tax information that affects you and your institution. Please visit often to ensure you receive all the latest information.

    Accounting for Transfers of Financial Assets
    May 7, 2010
    In June 2009, the Financial Accounting Standards Board (FASB) issued a new accounting standard (Financial Accounting Standard No. 166) that amends previous guidance on accounting for transfers of financial assets.  This standard is effective as of the beginning of an entity’s first annual reporting period beginning after November 15, 2009 (for calendar-year entities, it will be effective January 1, 2010).

    Unrelated Business Income Tax Update
    March 31, 2010
    In late 2009, the judge in the Bellco Credit Union case issued a summary judgment with respect to sales of investment products to members stating that the income from sales of investments such as stocks, bonds, mutual funds, and annuities is not subject to UBIT. The judge has not yet decided all of the issues in the case, which was held in December 2009. The judge must still issue rulings with respect to the sale of credit life and disability products to members.

    Hiring Incentives To Restore Employment Act
    March 30, 2010
    The Hiring Incentives to Restore Employment Act (HIRE Act) was signed into law on March 18, 2010. The bill includes provisions that encourage companies to hire unemployed workers by exempting certain wages from the employer’s Social Security taxes, and by providing employers with a tax credit if new hires are retained for at least 52 consecutive weeks.

    Refund Claim For FICA Taxes On Severance Payments
    March 30, 2010
    Downsizing is a fact of life in today's challenging business environment and often results in severance payments to departing workers. These severance payments are included in workers’ income and subject to federal income tax withholding; however, the FICA tax treatment for severance payments has been a controversial issue over the years.

    NACHA Rule Changes – Stop Payments and Authorization Revoked
    March 25, 2010
    Two changes to the National Automated Clearing House Association (NACHA) operating rules relating to stop payments and Regulation E and authorization and returns became effective on March 19, 2010. These changes require a review of the procedures and forms a financial institution has established to ensure compliance with Regulation E and the rules.

    Prepaid FDIC Assessment
    December 8, 2009
    In FIL-63-2009, the FDIC announced it adopted a final rule requiring insured financial institutions to pay on December 30, 2009, their 3rd quarter 2009 assessment (as scheduled) and to prepay their quarterly risk-based assessments for the 4th quarter 2009 and for all of 2010, 2011, and 2012.  The amount of the prepaid assessment will be included on the statement invoices for the 3rd quarter 2009, which will be available no later than December 15, 2009.

    Tax Benefits Enacted In the "Worker, Homeownership, and Business Assistance Act of 2009"
    November 18, 2009
    Five-Year Carryback of Net Operating Losses (NOLS)
    The “Worker, Homeownership, and Business Assistance Act of 2009” has expanded the eligibility for a five-year carryback of NOLs and extended it to NOLs occurring in 2009. In February of 2009, Congress enacted a five-year carryback for 2008 losses, but it was only available to eligible small business taxpayers (defined as corporations, partnerships, or proprietorships with average annual gross receipts of $15 million or less). Unfortunately, this definition restricted the benefit to only a few small banks that had losses for 2008.

    Wisconsin Tax Changes Affecting Financial Institutions
    October 9, 2009
    Combined Reporting was included in the state's Budget Repair Bill (Wisconsin Act 2) passed in February 2009. This legislation was introduced on February 17, passed by both houses on February 18, and signed into law on February 19. It is effective for taxable years that begin on or after January 1, 2009, and will affect C corporation banks that are part of a combined group of corporations. Combined Reporting is comparable to consolidated returns which are filed for federal purposes, but get more complicated when trying to measure how much income is reportable to the state if you do business inside and outside the state.

    Failure To Appeal Is Appealing
    September 21, 2009
    The Internal Revenue Service chose not to appeal the jury decision in favor of Community First Credit Union of Appleton, Wisconsin.  The IRS's deadline for filing the appeal was September 12, 2009.  The products at issue in the Community First Credit Union case included credit life insurance, credit disability insurance, and guaranteed asset protection (GAP) products.

    Revisiting FDICIA: A Summary of Key Part 363 Final Rules
    July 27, 2009
    The FDIC has recently released revised rules for Part 363, commonly known as FDICIA. The changes were driven by experience with prior compliance and a desire to clarify prior guidance and incorporate certain items from the Sarbanes-Oxley Act Section 404 into FDICIA requirements. The goal of the revised rules is consistent with the original rules, which is to facilitate the early identification of problems in financial management of covered institutions. The assumption behind the goal is that audited financial statements and effective internal controls over financial and regulatory reporting assist the FDIC in executing their oversight and monitoring role.

    With the rules freshly finalized, this Accounting Insight summarizes the key requirements so you can consider their impact on your institution and your current state of readiness. Please note we have not addressed every compliance issue in Part 363, and we encourage you to read the full text and supporting documents at http://www.fdic.gov/news/news/financial/2009/fil09033.html to provide additional information on issues not addressed by this Accounting Insight.

    IRS Argument Doesn't Appeal to Judge
    July 23, 2009
    The judge in the Community First Credit Union case rejected the government's appeal of the jury's verdict in favor of the credit union. On May 14, 2009, the U.S. District Court jury in Green Bay found for Community First Credit Union in allowing a refund claim of $54,604 of overpaid unrelated business income tax (UBIT). On July 14, 2009, U.S. District Court Judge William Griesbach rejected the government's claim that the jury lacked an evidentiary basis for its verdict. The IRS now has 60 days to appeal the judge's ruling. The IRS has not yet issued a response to Judge Griesbach's ruling; however, it is likely to appeal.

    Temporary Corporate Credit Union Stabilization Fund Update
    June 25, 2009
    On June 18, 2009, the National Credit Union Association (NCUA) Board took actions to provide relief to the credit union industry as it deals with the stabilization of the corporate credit union system. This Accounting Insight will summarize the actions taken by the NCUA Board and how they will impact credit union financial reporting for June 30, 2009.

    Corporate Stabilization Fund & Investments in Corporate Credit Unions Q & A
    June 8, 2009
    Currently, there is quite a bit of uncertainty surrounding the creation of the new Temporary Corporate Credit Union Stabilization Fund and its impact on NCUSIF deposit impairment. Questions have also been asked regarding the impairment of investments in corporate credit union Paid-In Capital (PIC) and Membership Capital Accounts (MCA). This Accounting Insight addresses some of the more significant questions related to these two items. The answers below are preliminary and depend greatly on what actions the NCUA will take and any additional guidance provided by the NCUA.

    Community First Credit Union Wins First Round
    May 15, 2009
    As many of you are now aware, the jury in the Community First Credit Union case returned a verdict yesterday in favor of the Appleton credit union. The federal district court jury ruled the IRS must refund the unrelated business income tax (UBIT) paid by the credit union on the sale of certain financial products to members.

    Troubled Asset Relief Program & Temporary Liquidity Guarantee Program
    February 16, 2008
    This Insight summarizes the published guidance related to the Capital Purchase Program, Transaction Account Guarantee Program, and Debt Guarantee Program, highlights some of the key issues banks are facing regarding these programs, and presents some recommended action points to be considered.

    The Complexity of Foreclosed Assets
    Jul 28, 2008
    Accounting for transactions concerning foreclosed assets often requires research due to the complexity of the transactions or the infrequency with which they occur. This Accounting Insight is intended to help by summarizing the accounting rules for various foreclosed asset transactions.