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”.
Are churches and other houses of worship immune from IRS scrutiny against them and their ministry staff? The current bar is exceedingly high for the IRS to pursue religious institutions (collectively “churches”). But the bar is not insurmountable, particularly when it comes to clergy members’ individual tax liability. The recently decided case of Rowe v. United States demonstrates that churches may be subject to IRS scrutiny, through audits against their clergy members despite special procedural safeguards for such religious institutions.
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.