Not-for-Profit News Flash December 2019

Randy ChmTax Alert

Tax Alert from Maloney+Novotny

Budget Bill Repeals Parking UBI and Changes Private Foundation Tax Rate

Note: This article has been updated to reflect changes in the current law. Please go to this page to read the most current information.

Chris Anderson, CPA

Chris Anderson, CPA

Although not law yet, Congress has reached a budget bill agreement that includes tax extenders and two important provisions for not-for-profit organizations.  The President is expected to sign the bill.

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taxable revenue for the costs of providing employees with certain transportation benefits including parking has been repealed.  At this time, it appears that the repeal will be 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 is also eliminating 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 the date of enactment of this bill.

We will continue to monitor these changes and provide updates.  If you have any questions, please contact Chris Anderson, Tax Shareholder, at canderson@maloneynovotny.com.

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