Opinion ID: 411167
Heading Depth: 3
Heading Rank: 2

Heading: Debt Collection Services

Text: 64 LCUL argues that its involvement in debt collection protects the integrity of member credit unions and therefore is substantially related to its exempt purpose. 23 The district court found that the primary purpose of the debt collection service was to earn money for the League. The court further observed that because only certain members utilized the League's debt collection services, the benefits produced were not inherently group benefits. We believe these findings to be correct. We have no doubt that the individual credit unions that assign their claims to LCUL for collection benefit greatly from the League's services. Nevertheless, LCUL's tax exemption is based on the notion that a business league promotes a common business interest of all its members and does not perform particular services for individual persons. Treas.Reg. Sec. 1.501(c)(6)-1. Because the benefits of LCUL's debt collection activities accrue only to certain credit unions, these activities constitute the performance of services of a commercial nature for individual members rather than the promotion of a common business interest with inherently group benefits. See also Rev.Rul. 73-386, 1973-2 C.B. 191 (exempt business league that provided job injury histories to prospective employers is engaged in unrelated trade or business); Rev.Rul. 68-267, 1968-1 C.B. 284 (exempt business league that operated a coupon redemption service for members is engaged in unrelated trade or business). Accordingly, we affirm the district court's holding that the League's debt collection activities are not substantially related to its exempt purpose.