Looking forward into 2020, tax-exempt organizations are facing a few new forms and tax changes. Keep reading to find out what updates have been made and what’s still coming.
Repeal of Nonprofit Parking Tax
In December of 2019, Congress retroactively repealed the 21 percent tax on qualified transportation fringe benefits provided to employees, commonly referred to as the nonprofit “parking tax”. The repeal is retroactive to the original effective date of January 1, 2018, which means if your organization previously had filed a Form 990-T to report transportation fringe benefits provided to employees and paid tax on disallowed fringe benefits, your organization will be able to claim a refund for any tax paid by filing an amended Form 990-T. The IRS has issued guidance for amended forms 990-T that are being filed only to claim a refund, credit, or adjust information due to the repeal of the parking tax should state at the top of the return “Amended Return – Section 512(a)(7) Repeal.”
The California Attorney General’s Office — Amendments to California Regulations
The California Attorney General, Department of Justice has proposed amendments to various sections of the California Code of Regulations which governs reporting of charitable organizations, commercial fundraisers, and raffles.
As a result to these amendments, the Attorney General’s Registry of Charitable Trusts has implemented updates to required forms for charities, commercial fundraisers and raffles. The official version of these new forms was released at the end of January and are required to be used by charities and professional fundraisers effective February 1, 2020.
Significant changes to the forms include the following for charities:
- New Form CT-TR-1: Required to be filed annually for charities with annual revenue under $50,000
- Updated RRF-1 annual registration renewal form now requires that charities report noncash donations
- Updated Form CT-1 initial registration form requires additional information for new charities. Although this won’t affect existing charities, the following information will be required for all new charities initial registration:
- Listing of all dbas and the names that the organization uses or has used;
- Whether the organization’s tax-exempt status has ever been denied, revoked or modified by the IRS or the Franchise Tax Board;
- Whether the organization or any of its officers, directors or trustees have been the subject of a court or administrative proceeding in any state regarding any solicitation or registration; and,
- Whether any of the organization’s officers, directors or trustees have been convicted of any crime involving the misuse or misappropriation of funds or any crime involving deception in the operation of a charity.
Additionally, various changes have also been made to the professional fundraiser forms and raffle forms. Please note when conducting fundraisers and/or raffles that these changes will also take effect on February 1, 2020.
Private Foundation Update to Net Investment Tax
Private foundations generally must pay a tax on their net investment income. Under prior law, the tax rate on net investment income was generally 2 percent, but could be reduced to 1 percent in years in which the foundation’s qualifying distributions, such as grants, exceeded the foundation’s average historical level of distributions. The new law adopts a uniform 1.39 percent tax on private foundation’s net investment income. This provision is effective for tax years beginning after December 20, 2019.
Have More Questions?
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Meet the Author
Elsa Romero, CPA
Aldrich CPAs + Advisors LLP
Elsa Romero brings nearly 20 years of experience and specializes in consulting and tax compliance services for closely-held businesses, nonprofit and government clients. Her knowledge of complex tax issues is invaluable and clients appreciate her thoughtful approach to their needs. She is a valuable resource for organizations seeking specialized attention for tax compliance, board governance…
- Tax planning
- Nonprofit organizations
- Government entities
- Privately held companies
- Board governance
- Certified Public Accountant