regulatory and compliance issues and considerations

Party Consideration Potential Consequences // One or All of
the Following may Apply
Board Members /
Volunteers
(1) Is it permissible per the
FCU Act? Limited per
the Act as
“volunteers” cannot
generally be
compensated with the
exceptions noted
below.
(2) Is it within the Credit
Union’s written
Policy?
(3) Is it in any way
intended to subvert
the forgoing?
(1) If not permissible violates the FCU Act?
NCUA may use it authority to pursue
civil or criminal penalties as appropriate.
(2) If outside of approved policy – Credit
Union cannot pay / reimburse; and
Volunteer may be called upon to
reimburse.
(3) May be a violation of a duty to the Credit
Union and its members under state
laws; and If it is interpreted as a
violation of FIRREA – the US
government may pursue civil or criminal
penalties as appropriate.
Credit Union Employees
(1) Is it permissible per the
FCU Act? Generally –
NOT limited as
employees are
“compensated” (not
volunteers). NOTE:
There may be Income
issues per IRS Rules
and Regulations for
expenses associated
with family members.
It is recommended
you consult with your
tax adviser on such
personal matters.
(2) Is it within the Credit
Union’s written
Policy?
(3) Is it in any way
intended to subvert
the forgoing? See (3)
in Consequences for
Volunteers above.
(1) and (2) This issue is considered much
differently for an employee. With an
Employee the issues are not focused as
much on the “can / cannot” – but instead on
(1) whether policy allows for the
reimbursement; and (2) whether the
reimbursement is taxable to the employee.
Generally (and each person should consult
with their tax adviser) Under IRS regulations,
the travel expenses of a spouse are
generally not taxable, provided it can be
established that his or her presence serves a
bona fide business purpose. A spouse who
attends a function is considered to have a
business purpose if he or she has a
significant role in the proceedings or makes
an important contribution to the success of
an event. Generally, protocol or tradition
dictates when the participation of an official's
spouse is required at official function.
Generally, if a spouse has no significant role
in the proceedings, or performs only
incidental duties of a social or clerical nature,
attendance does not constitute a bona fide
business purpose. Such expenses are
taxable to the employee.
Refer to IRS Publication 17:
http://www.irs.gov/publications/p17/ch26.htm
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Summary of the NCUA’s Rules on “Reimbursement of Volunteers Expenses:
Copyright©1994-2010 by Credit Union Resources & Educational Services, LLC. All rights reserved.
Revised February 2010
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