Alert

Tax on Certain Fringe Benefits Repealed and Single Excise Tax Rate Set

LinkedIn Share Button Twitter Share Button Other Share Button Other Share Button

Certain tax-exempt organizations stand to benefit from tax-law changes contained in legislation signed into law on December 20, 2019.

The legislation repeals a provision of the Tax Cuts and Jobs Act of 2017 that classified qualified transportation benefits, qualified parking facilities, and on-premises athletic facilities as unrelated business income for tax-exempt organizations.

The repeal would be retroactive to the passage of the 2017 tax-reform bill and allow organizations that paid unrelated business income tax on these fringe benefits to seek a refund.

For private foundations, the legislation establishes an across-the-board 1.39% excise tax on net investment income as opposed to the two-tier excise tax previously imposed where foundations were taxed at either 1% or 2%. The 1% rate applied to those private foundations whose qualifying distributions equaled or exceeded a certain threshold.

The new tax rate goes into effect for taxable years beginning after the date this legislation was enacted.

We’re Here to Help

Contact your Moss Adams tax-exempt advisor to learn more about how this legislation could affect your organization.

Contact Us with Questions

Baker Tilly US, LLP, Baker Tilly Advisory Group, LP and Moss Adams LLP and their affiliated entities operate under an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations and professional standards. Baker Tilly Advisory Group, LP and its subsidiaries, and Baker Tilly US, LLP and its affiliated entities, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP and Moss Adams LLP are licensed CPA firms that provide assurance services to their clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. ISO certification services offered through Moss Adams Certifications LLC. Investment advisory offered through either Moss Adams Wealth Advisors LLC or Baker Tilly Wealth Management, LLC.