This week, the American Society of Association Executives (ASAE) sent a letter to Treasury officials this week requesting a one-year delay in implementing a requirement in the new tax law that unrelated business income (UBI) be separately computed for each business activity.
Previously, exempt organizations could report their UBI from all activities, deduct the related expenses and pay tax on the resulting net taxable income. The Tax Cuts and Jobs Act (TCJA) establishes this new requirement to be effective for tax years beginning after Dec. 31, 2017.
“Additional guidance is urgently needed to assist tax-exempt organizations in determining with certainty what, in the administration’s interpretation, makes up a separate unrelated trade or business,” ASAE said in its comments. “Absent specific guidance, it is extremely difficult for tax-exempt organizations to keep appropriate records and report UBI accurately in compliance with this provision.”
ASAE’s letter to Treasury echoes comments submitted by the American Institute of CPAs (AICPA) that the lack of guidance on this provision affects tax practitioners who are unable to accurately and consistently advise tax-exempt organizations on the calculation of estimated tax payments for 2018.
Given the substantial record-keeping changes this provision demands of tax-exempt organizations, ASAE and AICPA have requested a one-year delay to allow tax-exempt organizations time to determine how to comply with the new reporting requirements.
This article was provided to OSAE by the Power of A and ASAE's Inroads.