2.700 Entity Exempt from Taxation

Entity Exempt from Taxation

2.700

21.5

23.3

24.3

25.5

26.8

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2.701
Exemption of Credit Union Income

Credit unions, which are member owned financial cooperatives, are considered tax-exempt organizations for both federal and state income tax purposes and therefore are generally exempt from the income measure of the corporate excise. However, like other nonprofit entities, unrelated business income of credit unions is subject to the income measure of the corporate excise.

In 1909, the enactment of the Massachusetts Credit Union Act (Chapter 419 of the Acts of 1909) authorized the creation of Massachusetts chartered credit unions as tax exempt entities. In 1934, the enactment of the Federal Credit Union Act, 12 USC § 1751, et seq., authorized the creation of federally chartered credit unions, which are exempt from federal income tax pursuant to 26 USC § 501(c)(14)(a). The Massachusetts Credit Union Act was significantly overhauled in 1990, pursuant to Chapter 79 of the Acts of 1990. However, this overhaul had no effect on the taxability of credit unions.

IRC §501(c)(14)(A); M.G.L. c. 63, § 30

26.8

2.702
Tax-Exempt Organizations

Corporations considered to be tax-exempt under section 501 of the Internal Revenue Code (such as religious, scientific and educational organizations) are taxable under the corporate excise only on their unrelated business taxable income as defined in section 512 of the Code. They are not taxable on other income and are not subject to the non-income measure or to the minimum excise. This creates a tax expenditure..

IRC § 501; M.G.L. c. 63, § 30; M.G.L. c. 63, § 39

N.A.

2.703
Exemption for Regulated Investment Companies

Regulated Investment Companies are exempt from the corporate excise. This item constitutes a tax expenditure in Massachusetts, though it is not considered a tax expenditure at the federal level.

M.G.L. c. 63, § 68C(8)

N.A.

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