09/19/2018

ASAE Provides Update on Treasury's Latest UBIT Provision

What the IRS' latest UBI silo guidance means for associations

Last month, the U.S. Department of Treasury issued new rules on the provision in the new tax law that requires separate computation of unrelated business income tax (UBIT) for tax-exempt organizations with more than one unrelated trade or business. The interim guidance allows for organizations to net their parking and transportation expenses against any other UBIT income, which could wipe out any tax.  

The American Society of Association Executives (ASAE) and the UBIT Coalition, of which the Ohio Society of Association Executives (OSAE) is a part, have been asking for guidance from Treasury for months on the siloing provision as well as the parking and transportation fringe benefits provision, both part of last year’s Tax Cuts and Jobs Act (TCJA)

The Internal Revenue Service (IRS) guidance Notice 2018-67 provides that UBIT arising from tax-exempts’ parking and transportation benefits is not subject to the “silo” rule. As such, unrelated trade or business losses from any source can be used to zero out the parking and transportation tax. 

Unfortunately, this new guidance will not help associations and charities without any other sources of unrelated business income (UBI). Examples of UBI include advertising, rental income and endorsed products. ASAE and the UBIT Coalition will continue to urge Treasury to delay these provisions and separately pursue a legislative fix by Congress.

To learn more about this issue click on this analysis from Nat Bartholomew, CPA, Principal-In-Charge, CliftonLarsonAllen LLP.  ASAE and OSAE will keep you apprised of any new developments. For questions, please contact ASAE's public policy team at (202) 626-2703 or publicpolicy@asaecenter.org.