Tax on Certain Fringe Benefits Repealed and Single Excise Tax Rate Set
by Wendy Campos, Partner and Steve Talbot, Manager, Not-for-Profit Practice
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.
Wendy Campos has practiced public accounting since 2000 with a focus on tax-exempt organizations. She consults with clients on unrelated bus">iness income, obtaining and maintaining tax-exempt status, uncertain tax positions, excess benefit transactions, Form 990, and more. She can be reached at (503) 478-2165 or wendy.campos@mossadams.com.
Steve Talbot has practiced public accounting since 2013. He serves a range of tax clients, including individuals, corporations, and not-for-profit entities. He can be reached at (505) 878-7283 or steve.talbot@mossadams.com.