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”.
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.
The IRS’s announcement on July 17, 2018 that it will no longer require Form 990 Schedule B donor disclosures sent shock waves through the tax-exempt sector. While such action reflects notable government restraint and certainly affects many tax-exempt organizations, there is no change for Section 501(c)(3) organizations that file Form 990s or for Section 527 “political action committee” (PAC) reporting. So why the change, and what are its implications?