Armanino Blog
Article

Repeal of Parking Tax Changes Foundation NII Tax Rate

by Katy Brown, Kelly Gillette

Congress passed a comprehensive $1.4 trillion spending package this week and the President signed it late Friday night. Tax extender provisions were added as an amendment to the original bill. Included in the tax provisions were a few key changes that may impact nonprofit organizations:

  1. Section 206 - Modification of the excise tax rate on net investment from the two-tiered 1%/2% rate to a flat 1.39%
  2. Section 302 - Retroactive repeal of the increase in UBTI for certain fringe benefit expenses.

The change in the excise tax rate should simplify private foundation distribution modeling decisions. Previously, this was performed to determine whether the organization would meet the previously lower 1% excise tax rate. This possibility has been discussed and is generally seen as a positive simplification for most organizations. The expected results are a revenue neutral tax change.

The repeal of Internal Revenue Code section 512(a)(7) is a welcome relief for large and small nonprofit organizations that have grappled with the uncertainty and cost of that now repealed tax since its appearance in the 2017 Tax Cuts and Jobs Act (13703 of Public Law 115-97). This legislation was largely unpopular on both sides of the aisle, but previous attempts at proposed legislative repeal were unsuccessful based on the cost of repeal. Now, included in the larger spending bill, nonprofit organizations and practitioners will see the reversal of what has been one of the more maligned taxes impacting the industry.

Next Steps

Further guidance is expected, and we will provide an update as more information becomes available. Contact your local Armanino Nonprofit Tax expert with any questions or concerns relevant to your specific tax situation.

December 20, 2019

Stay In Touch

Sign up to stay up-to-date with the latest accounting regulations, best practices, industry news and technology insights to run your business.

Authors
Resources
Related News & Insights
Latest Updates for Dynamics GP & Cloud Roadmap
Webinar
Get the latest updates on the future of Dynamics GP.

February 14, 2022 | 10:00 AM - 11:00 AM PT
Blog articles
Article
Listening to our people (plus cocktails and trivia) helps create a culture where all feel safe to be themselves.

January 21, 2022
Regulatory and Industry News Alerts from Armanino
Article
Review the basics on ARPA funding to see whether you should consider partnering with local government to receive funds.

January 21, 2022