Want to stay up to date, but need the short version? We’ve got you covered! Here are the major federal policy updates from Washington, DC that may impact nonprofit work this month.
Mandatory 990 filing for tax-exempt organizations
The House of Representatives passed H.R. 5443 on April 17, which would require all tax-exempt organizations to file their annual Form 990 information returns electronically. The legislation, introduced by Rep. Mike Kelly (R-PA) is designed to increase transparency by making nonprofit data more readily available. The bipartisan legislation intends to help shut down fraudulent charitable organizations, and reduce the administrative burden of repetitive federal and state filing requirements.
Unrelated Business Income Tax (UBIT)
The Tax Cuts and Jobs Act (TCJA) passed at the end of 2017 modified many of the employer-provided fringe benefits that impact nonprofits and their employees. Effective as of January 1, 2018 there are particular expenses that now trigger the UBIT for nonprofits, and are treated as income expense. Nonprofits now will be taxed for providing employee benefits, such as transit or parking – even if employees are paying for the benefits themselves through a pre-tax plan, or if organizations are legally required to provide the benefits. Independent Sector and our partners are meeting with Treasury officials and members of Congress to understand the impact, and ensure that the law does not go into effect until after the IRS issues final rules clarifying how to comply. Listen to our Voices for Good episode on UBIT to learn more.
Preserving student loan forgiveness
Despite financial support in the FY 2018 budget to continue the Public Service Loan Forgiveness Program (PSLF), the fight in Congress to preserve PSLF long-term continues. The Promoting Real Opportunity, Success and Prosperity through Education Reform (PROSPER) Act, sponsored by Rep. Virginia Foxx (R-NC) would eliminate the PSLF program for new borrowers moving forward – stripping away this benefit for students and the communities served by civil society. Policymakers may also consider excluding some nonprofit employees, like those who work at foundations, from participating in the program. Learn more about PSLF and write your members of Congress.
Last month we discussed, the Taxpayer First Act. The House unanimously voted to pass this bi-partisan legislation last week. Senate Finance Committee Chair, Orrin Hatch, (R-UT) has expressed enthusiasm for exploring legislative options in the Senate.