Nonprofit Law Prof Blog

Small Details in GOP Tax Plan Affect NY Nonprofits in a Big Way

In her article, Sharon Stapel, discusses how the GOP tax plan (now the Tax Cuts and Jobs Act) will affect nonprofit organizations in the state of New York. She begins her article by discussing some of the proposed changes that did not make it into the final bill. These include eliminating the private activity bonds, imposing an excise tax on tax-exempt organizations, and including payout requirements for donor advised funds. Next, she discusses how nonprofits are now taxed on unrelated business income at the corporate tax rate and how there is a new excise tax of 21% on nonprofit employees who make more than $1 million with the nonprofit paying the tax and not the employee. Then she discusses how the bill cuts funding to certain social welfare funds and how those funding cuts will affect the nonprofits of New York. She then goes on to explain that the jobs act eliminates the penalty for not complying with the individual mandate, which she fears will result in higher health insurance for nonprofits. To learn more about how the small details in the jobs act affect nonprofits, click here: https://www.nynmedia.com/news/small-details-in-gop-tax-plan-affect-ny-nonprofits-in-a-big-way dab

The New Tax Law and Its Impact on Nonprofits-Part 2

    Part 2 of this article discusses how the operations of nonprofit organizations and how the new jobs act will impact them. The first impact it discusses is how UBIT is calculated. Before if a nonprofit ran two different unrelated business activities the nonprofit could offset the losses from one activity against the gains of the other one. This is not permitted anymore. Now, any losses from one activity can be carried over indefinitely, but can only offset the same activity. Next, the article explores the limitations on entertainment related deductions. Organizations may no longer take deductions for any activity considered entertainment, amusement, or recreation (even if it is directly related to the organizations purpose); any facility used for entertainment, amusement, or recreation; or any transportation fringe benefit. To learn more about how the operations of nonprofits are impacted by the new jobs act, click here: http://www.nonprofitlawblog.com/new-tax-law-impact-nonprofits-part-2/<https://na01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.nonprofitlawblog.com%2Fnew-tax-law-impact-nonprofits-part-2%2F&data=02%7C01%7Cdavid.brennen%40uky.edu%7Cc00f9732b33746c00b1c08d5dc4760b5%7C2b30530b69b64457b818481cb53d42ae%7C0%7C1%7C636657121479442930&sdata=1qKUrHGBcwQB%2FZYuV%2BVenhDDauhK6hyrY73VhGgnADM%3D&reserved=0>

 

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How the Beatles Predicted Your 2018 Tax Increase

    This article begins by describing how the Beatles song “Penny Lane” predicted that employee fringe benefits would be taxed. The new 2017 Tax Cuts and Jobs Act now charges unrelated business income tax on employee fringe benefits. The jobs act is now taxing nonprofits for on-site employee parking and athletic facilities like they would a for profit corporation. The jobs act even taxes nonprofits in communities that require them to provide transportation benefits. Next, the article explores how the song “Everybody’s got something to hide except me and my monkey” predicted silo accounting for earned income. The new jobs act calculates UBIT by activity rather than for the total of the organization’s operations. Each activity is taxed at a rate of 21% that cannot be reduced. To read more about how the Beatles predicted your 2018 tax increase, click here: https://independentsector.org/news-post/ubit-beatles-predicted-2018-tax-increase/<https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Findependentsector.org%2Fnews-post%2Fubit-beatles-predicted-2018-tax-increase%2F&data=02%7C01%7Cdavid.brennen%40uky.edu%7Cc00f9732b33746c00b1c08d5dc4760b5%7C2b30530b69b64457b818481cb53d42ae%7C0%7C1%7C636657121479442930&sdata=kJLROobFbbbNO20l0f9jrI55aRN%2BCuuHQuz6ocg3mtE%3D&reserved=0>

 

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St. Paul Struggles with Nonprofit Taxation Issues

    In this article, Larry Kaplan, discusses the city of St. Paul’s new solution to get money from nonprofit organizations that do not have to pay property taxes. The article begins with the failed “right of way assessment program”, a bill to nearly every property in the city for snow clearing and removal of trash. The state Supreme Court struck down the implementation of this plan, so new ideas have been introduced. One of these new ideas is to get rid of street fees altogether and raise the property tax levy that specifically exempts nonprofit organizations, and then ask nonprofits to make voluntary payments in lieu of taxes, or PILOTS. St. Paul would seek payments from nonprofits with more than $15 million in property value. St. Paul has some concerns with the payments and their voluntary nature. To learn more about this interesting solution, click here: https://nonprofitquarterly.org/2017/02/20/st-paul-struggles-nonprofit-taxation-issues/

 

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Substantiating Charitable Contributions

    In this article, the IRS explains how contributors to charitable organizations can substantiate their contributions. The article begins by explaining that charitable organizations must provide written disclosure statements to donors of quid pro quo contributions in excess of $75. Quid pro quo contributions are defined as a payment made to a charity by a donor partly as a contribution and partly for goods and services provided to the donor by the charity. Next, the article explains what must be included in the disclosure statement. The disclosure statement must inform the donor that the amount of the contribution is deductible for federal income tax purposes is limited to the excess of any money contributed by the donor over the value of goods and services provided by the charity and provide the donor with a good faith estimate of the value of the goods and services the donor received. To learn more about how contributors can substantiate their contributions, click here: https://www.irs.gov/charities-non-profits/substantiating-charitable-contributions

 

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Attempts by Exempt Organizations to Influence Judicial Appointments

In this article, the IRS explains what happens when tax exempt organizations attempt to influence judicial campaigns. The article begins by explaining that under the Internal Revenue Code exempt organizations can lobby for or against the appointment of federal judicial candidates, even Supreme Court Justices, but the rules for specific types of organizations differ. 527 Political Organizations may engage in unlimited lobbying and the exempt function activity for political organizations includes expenditures for influencing the appointment of individuals for public office. The next type of exempt organization that is explored are the 501(c)(3) charitable organizations. 501(c)(3) organizations are usually not permitted to influence political campaigns, but they are permitted to influence senate confirmations if they follow certain rules. 501(c)(3) organizations can engage in lobbying activity if it furthers their exempt purpose, and so long as lobbying is not a substantial part of the organization’s activities. To learn more about the rules exempt organizations must follow to influence judicial appointments, click here: https://www.irs.gov/charities-non-profits/attempts-by-exempt-organizations-to-influence-judicial-appointments dab