04/19/2018

National Organization Looks for Tweaks in Tax Law

ASAE is also preparing to ask Treasury for additional guidance on several provisions

The American Society of Association Executives (ASAE) and many other associations are still seeking changes or at least clarification on a handful of provisions in the tax law enacted at the end of last year.

Next week, ASAE has arranged for a delegation of association leaders to meet with Treasury officials to discuss changes in the new tax law affecting fringe benefits. Late last month, ASAE submitted comments on recently-issued guidance on fringe benefits late last month.

The fringe benefits provision removes a deduction for employer-provided benefits such as transportation, parking and on-premises athletic facilities. While the provision applies to all employers, the new law disproportionately hurts tax-exempt employers by requiring them to pay a new unrelated business income tax (UBIT) on the value of benefits. ASAE contends this is a new tax on an expenditure, not even a revenue-generating activity.

In addition, some cities, including Washington, D.C., New York and San Francisco, have mandated that employers provide pre-tax mass transit benefits, so employers in those cities do not have the option of changing those benefits.

The goal of the meeting with Treasury later this month will be to share with Treasury officials how this provision impacts tax-exempt employers in particular, and reinforce the need for a delay in implementation of this provision and special consideration for employers in localities that mandate transportation benefits.

ASAE is also preparing to ask Treasury for more guidance on a provision in the tax law that requires that unrelated business income (UBI) be separately computed for each business activity. This provision was included in the tax law ostensibly to prevent tax-exempt groups from using the loss from one unrelated business activity to offset the income from another unrelated business activity.

With the 2018 tax year well underway, tax-exempt organizations are badly in need of guidance from Treasury on what activities may constitute separate businesses. Given the absence of guidance, groups like AICPA have asked Treasury to delay implementation of this provision for one year to give tax-exempt organizations adequate time to comply with the new requirements. ASAE intends to echo AICPA’s comments in its own letter to Treasury next week.

This article was provided to OSAE by the Power of A and ASAE's Inroads.