Nonprofit Tax Update: Important TCJA Changes You Need to Know - A Mission Matters Blog Article from KLR

Mission Matters Blog

Nonprofit Tax Update: Important TCJA Changes You Need to Know

posted Jun 14, 2019 by Sandy Ross, CPA, CFE in the Mission Matters Blog

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Did you miss our webinar, Nonprofit Tax Update: Important TCJA Changes You Need to Know? Have no fear! You can access a recording along with the presentation slides here.

A quick summary of what we covered:

December 2017’s Tax Cuts and Jobs Act (TCJA) has had a significant impact on not-for-profit organizations, and many organizations are just now feeling the impact of the massive tax overhaul. In our webinar, we shed some light on some areas of the TCJA that have impacted NFPs, and how organizations can be sure they’re in compliance with all regulations. We covered:

  • Taxable transportation and parking expenses — Is the parking you provide to employees still tax free?
  • Check out our blog on this, Does my Nonprofit Have to Pay Tax on Employee Parking?
  • Unrelated business income tax (UBIT) — Do you have UBIT from multiple unrelated activities?
  • TCJA FAQs 

Here are some questions that came up during our webinar:

  1. If final guidance has not been issued, what guidelines should we be using?

    As mentioned in the fifth slide, final guidance was issued April 9, 2019 for excise tax on excess tax-exempt organization executive compensation and excise tax on investment income of private colleges and universities.

    Regarding the guidance for unrelated business income tax (UBIT) and transportation/parking benefits, the proposed regulations are assumed to be the final regulations as they were included in form 990T as a reference. For now, use the facts and circumstances of your organization, and keep in mind that we are using the proposed guidance as if it was the final guidance.
     
  2. You mentioned “NAICS codes”—can you explain what they are and how you can find them?

    NAICS, the North American Industry Classification System, is the standard used by Federal statistical agencies to classify business establishments for the purpose of collecting, analyzing and publishing statistical data related to the U.S. business economy. From a nonprofit standpoint, we use this kind of tracking tool internally to determine which organizations/industries we serve. It is a categorization based on service, sector and activities. The IRS has also included a common list on the 990T instructions—much simpler way to determine business activities.

    You have to use the NAICS codes to record activities on Form 990T.
     
  3. Is there any chance that the tax on parking will be repealed?

    There has definitely been concern about taxing tax-exempt organizations. Several bills have been introduced but we haven’t seen any movement out of the House Ways and Means Committee. Like the universal charitable deduction, it hasn’t moved beyond initial proposal stage, but we may see this gain more attention as many recognize that this was an unintended consequence of the TCJA.
     
  4. Would a residential group home with a driveway for use for both employees and visitors (no spots reserved) - in addition to off street parking be considered qualified parking?

    Qualified parking is defined as parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work. So, if you provide parking to your employees, through a third-party parking garage or a parking lot your organization either owns or leases, you must take steps to determine if there is taxable benefit triggering UBIT.

Need further guidance on how the TCJA impacts your nonprofit? Contact our Non-profit Services Team.