IRS Notice 2018-67: Interim Guidance on Unrelated Business Taxable Income “Silos”

Does your nonprofit owe income tax on multiple “silos” of unrelated business taxable income (UBTI)?  This has been a difficult question for many tax-exempt organizations to answer due to the lack of guidance on what constitutes one unrelated trade or business, or one “silo.”  On August 21, 2018, the Internal Revenue Service (“IRS”) issued Notice 2018-67 (“Notice”), providing interim guidance, and greatly needed clarity, on how to identify separate trades or businesses in connection with unrelated business income tax (“UBIT”) liability.  This article provides six of the most notable take-aways from Notice 2018-67. 

The Changing Landscape of Unrelated Business Income Tax

The Tax Cuts and Jobs Act significantly altered our Tax Code, affecting individuals, for-profit organizations, and nonprofit organizations alike. This article discusses particular changes under the Act specific to unrelated business taxable income (“UBTI”). The new legislation provides that UBTI from each unrelated business must now be calculated separately, a requirement which is increasingly known as “siloing”. 

Taking Aim at New Nonprofit Parking Tax: Can This Please Be Undone?!

Does your church or other nonprofit provide parking at its facility to employees, at no cost? As a result of the 2017 Tax Cuts and Jobs Act, employer-provided parking fringe benefits are now – oddly enough – taxable to employers. In a strange twist for nonprofit employers, that means that they will now owe “unrelated business income tax” on the economic value of such parking benefit with the corresponding legal obligation to file IRS Form 990-T returns.