Tax Legislation Signed Into Law; Parking Tax Is Repealed

• Date: 01 March 2020
• Published date: 01 March 2020
• DOI: http://doi.org/10.1002/npc.30692

THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

TAX LEGISLATION

SIGNED INTO LAW;

PARKING TAX IS

REPEALED

The Further Consolidated Appropriations Act, 2020 was signed into law

on December 20 (Pub. L. No. 116-94). Division Q of this act, concerning revenue

provisions, is the Taxpayer Certainty and Disaster Relief Act of 2019 (Act).

The Act retroactively repeals the tax law provision by which expenses incurred

by tax-exempt organizations in providing certain types of fringe benefits are

converted into unrelated business income (IRC § 512(a)(7)). This repeal is pursuant

to Section 302 of the Act. The fringe benefit rule was added to the law on

enactment of the Tax Cuts and Jobs Act.

The Act also includes a provision by which the private foundation investment

income tax (IRC § 4940) is changed to a single rate of 1.39 percent (Act § 206).

The new tax rate is effective for tax years beginning after December 20, 2019.

Also, the Act amends the law concerning certain tax-exempt mutual and

cooperative organizations (IRC § 501(c)(12) entities) by eliminating from the

85-percent income-from-membership requirement forms of grants, contributions,

or other assistance (IRC § 501(c)(12)(J)) (Act § 301). [25.4, 12.4(f), 19.5,

respectively]

The Act (§ 204) further temporarily suspends the limitations on deductibility of

cash gifts by individuals (60 percent) and corporations (10 percent) to public chari-

ties for disaster relief efforts. To be eligible for this full deduction, a gift must have

been made in 2018 or 2019, or within 60 days after enactment of the Act (by

February 18, 2020). The donor must obtain substantiation of the gift, including

an acknowledgment that the contribution was used, or is to be used, for disas-

ter relief efforts (IRC § 170(f)(8)). The donee, however, may not be a supporting

organization or a sponsoring organization (for the establishment or maintenance

of a donor-advised fund). [7]

Thus, the intricate interim guidance concerning these fringe benefit rules

crafted by the IRS (summarized in the February 2019 issue) has come to naught,

except perhaps as a deterrent should this type of law be contemplated again. ◆

© 2020 Wiley Periodicals, Inc.

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DOI:10.1002/npc

Analysis of current developments in tax and

related law for nonprofit organizations

and their professional advisors.

Volume 37 Number 3

March 2020

Also in This issue...

IRS Restates Its Focus on

Syndicated Conservation

Easements 2

Tax Court Splits Over

Conservation Easement Tax

Penalty Process 2

Appellate Court Finds ACA

Mandate Unconstitutional,

Remands as to Severability 3

Defective Extinguishment

Provision Again Dooms

Easement Charitable Deduction 4

National Outreach Foundation

Case 4

IRS Misanalyzes Fundraising

Charity Case 5

IRS Declines to Apply EBT Rules,

Revokes Exemptions 5

Other Recent IRS Private Letter

Rulings 5

Nonprofit Organization Has

Fair Housing Regulatory Claims

Dismissed 6

IRS Issues Procedural Rules for

2020 6

JCT Staff Issues Report on 2019–

2023 Tax Expenditures 7

National Taxpayer Advocate

Blasts IRS (Again) 8