Not-for-Profit Tax Update January 2020

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Featured News

Budget Bill Repeals Parking UBI and Changes Private Foundation Tax Rate

UPDATE:  The following article has been updated from a previous version that was released before the bill was enacted into law.

parking garage

The bill, known as the Further Consolidated Appropriations Act of 2020, contains two important provisions for not-for-profit organizations.

First, the much-maligned provision in the Tax Cuts and Jobs Act of 2017 which forced not-for-profit organizations to recognize taxable revenue for the costs of providing employees with certain transportation benefits including parking has been repealed.  The repeal is retroactive to December 31, 2017, meaning that organizations that paid tax on parking unrelated business income will be entitled to a refund.

The second provision in the bill affects private foundations by changing the excise tax rate on net investment income to 1.39%.  Congress has also eliminated the provision which allows private foundations to qualify for a reduced tax of 1%.  Thus, private foundations will have only one tax rate going forward: 1.39%.  This change will apply to taxable years beginning after December 20, 2019.

We will continue to monitor these changes and provide updates, particularly once the IRS provides guidance on filing refund claims for parking.  If you have any questions, please contact Chris Anderson, Tax Shareholder, at canderson@maloneynovotny.com.

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