At the PPGC meeting on Tuesday July 9, 2019, I reported on several somewhat surprising updates occurring through June 30, 2019. The five items I reported on are as follows:
- The Taxpayer First Act (“TFA”) was signed by President Trump on July 1, 2019. This legislation purports to reform the IRS and was a bipartisan effort. It was also designed to increase taxpayer rights and improve IRS customer service. While many details will come through later Regulations, the TFA forbids IRS from using private debt collection agencies on taxpayers who are behind on their taxes but living within 200% of the federal poverty line. The TFA also sets up an Independent Office of Appeals and requires IRS to develop a comprehensive customer service plan within a year.
The TFA was sponsored by Mike Kelly, Butler, PA and John Lewis, Georgia, and enjoyed strong bipartisan support, passing the House of Representatives unanimously. According to Rep. Kelly, the TFA represents the first significant reform of the IRS in more than two decades.
- Unrelated business tax income inclusion for parking. As we’ve discussed before, this new provision imposes the unrelated business income tax (“UBIT”) on parking and transportation benefits provided by nonprofit organizations to their employees. Currently, the Oversight Subcommittee of the House Ways and Means Committee is scheduled to conduct a hearing focused on this extremely unpopular UBIT income inclusion.
- Disaster Relief Recommendations. The Senate Finance Committee Task Force on Disaster Tax Relief received recommendations to change the federal tax laws to assist nonprofits engaging in disaster relief. Most notable among the proposals is to create a nonitemizer, charitable deduction to provide a strong giving incentive to all people, regardless of tax-filing status. This type of provision would be helpful to disaster relief organizations as well as many other charities.
- Giving U.S.A. 2019. This annual charitable report by Giving U.S.A. was recently issued, stating that total charitable giving in 2018 rose 0.7% over the total contributed in 2017. Many had predicted strong declines in charitable giving due to the Tax Cuts and Jobs Act passed in December 2017. The report by Giving U.S.A. shows some decline in individual giving, but increases in other areas such as private foundations and corporate giving, still resulting in an increase in total charitable giving.
- Pennsylvania Budget. The PA state budget was passed this year two days early, on June 28, 2019. General spending for the next fiscal year is $34 Billion, up from $32.7 Billion in the prior fiscal year. Spending on education was increased substantially, including an increase in the education improvement tax credit (“EITC”) program. This year’s budget process was a vast improvement for nonprofit organizations from prior years when the state budget wasn’t passed until well beyond the June 30th deadline, resulting in much funding uncertainty. While nonprofit organizations may not have received all the funding that they desire, the budget was passed and on time, thereby giving nonprofit organizations certainty as to what is funded for the next fiscal year.
Conclusion: The recent passage of the TFA shows that charities need to stay abreast of changes in tax legislation, which in this case passed quietly at the end of June 2019. Taxpayers and charities alike also need to keep abreast of state budgets, new court decisions and IRS guidance continuing to be issued under the new tax legislation.
Please do not hesitate to contact us if you have any questions on any of these topics.
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Note: This provides general information regarding matters of interest to tax-exempt organizations. Such information is neither legal advice nor legal opinion concerning particular situations. If legal advice or opinion is required, legal counsel should be consulted.
We would be pleased to address any questions you may have regarding the foregoing or any other tax-exempt issues. For further information, please contact Susan Ott (412-745-9900), [email protected]; or Jack Owen (412-765-1020), [email protected].
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