Last month, President Donald Trump enacted into law the "Further Consolidated Appropriations Act, 2020" (H.R. 1865 – the "2020 Act").
Within the new law, there are two provisions that will greatly impact the nonprofit community – repeal of tax on parking and qualified transportation fringe benefits and flat excise tax rate on private foundations.
1) Repeal of Tax on Parking and Qualified Transportation Fringe Benefits
The 2020 Act repeals the inclusion of qualified transportation benefits and parking expenses as unrelated business income under Internal Revenue Code §512(a)(7). The repeal applies to amounts paid or incurred after December 31, 2017.
Further guidance on how to receive a refund of taxes paid related to qualified transportation benefits and parking expenses is forthcoming. Meanwhile, related estimated payments are no longer needed and signage designating parking spaces for "employees only" can be reinstated.
2) Flat Excise Tax Rate on Private Foundations
Effective in tax years beginning after December 20, 2019, a flat tax of 1.39% will be applied to net investment income. Prior to this, per Internal Revenue Code §4940, private foundations paid either 1% or 2% tax on their net investment income based on a calculation of charitable disbursements made in relation to the foundation's non-charitable assets. Tax professionals anticipate this simplification of the excise tax rate will ease the process of estimating tax payments and year-end planning.
For more information on these provisions, or other tax related questions, please contact your BPM Advisor, email [email protected], or call 415-421-5757.
BPM for Nonprofits
BPM is one of the largest California-based accounting and consulting firms, ranking in the top 50 in the country. Our Nonprofit Industry Group, one of BPM’s most established practice groups, consists of over 60 professionals across our tax, assurance and advisory practices. One of our founding goals is to make a difference in the manner nonprofits are served by our profession. Each member of our group brings differing expertise from our tax, audit, consulting and accounting departments. Together we provide a comprehensive understanding of the functions needed to operate a nonprofit organization. For more information, visit https://www.bpmcpa.com/Nonprofit.
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