Understanding the Tax Cuts & Jobs Act for Your Tax-Exempt Organization

IRS releases TCJA training materials for charities and nonprofits

The IRS recently released new resources for charities and nonprofits regarding the Tax Cuts & Jobs Act (TCJA). The TCJA Training Materials can be accessed on the IRS' website. The IRS provides the lessons to help explain how TCJA may affect tax-exempt organizations and charities.

What is the TCJA?

In December 2017, the TCJA was signed into law, representing the most significant tax code overhaul in over three decades. The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, Pub.L. 115–97, is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act, that amended the Internal Revenue Code of 1986.

Major elements of the changes include reducing tax rates for businesses and individuals, increasing the standard deduction and family tax credits, eliminating personal exemptions and making it less beneficial to itemize deductions, limiting deductions for state and local income taxes and property taxes, further limiting the mortgage interest deduction, reducing the alternative minimum tax for individuals and eliminating it for corporations, reducing the number of estates impacted by the estate tax, and cancelling the penalty enforcing individual mandate of the Affordable Care Act.

Lessons available from the IRS regarding charities

On its website, the IRS provides the following lessons regarding TCJA and charities:

  • Unrelated Business Taxable Income (UBTI) Computed Separately for Each Trade or Business - “Siloing”; IRC Section 511, Provision 13702

  • Increased Unrelated Business Taxable Income for Nondeductible Fringes; IRC Section 512(a), Provision 13703

  • Excise Tax on Excess Tax-Exempt Organization Executive Compensation; IRC Section 4960, Provision 13602

  • Excise Tax on Net Investment Income of Private Colleges and Universities; IRC Section 4968, Provision 13701

  • 529 Account Funding for Elementary & Secondary Education; IRC Section 529, Provision 11032

  • Foreign Dividends, IRC Section 965 (14103); Global Intangible Low-Tax Income; IRC 951A, Provision 14201

Additional TCJA resources

For additional information regarding UBTI, see our February 2018 Newsletter article titled Unrelated Business Income Tax – Changes Under the 2017 Tax Reform Act, and our January 2019 Newsletter article titled IRS Issues Guidance for Determining Nondeductible Amount of Parking Fringe and UBTI; Provides Penalty Relief to Tax-Exempt Organizations.

The IRS website includes additional resources regarding the TCJA, with topics such as:

  • Excise tax on excess tax-exempt organizations executive compensation

  • Excise tax on investment income of private colleges and universities

  • UBTI – estimated tax penalty relief for transportation fringe benefits

  • UBTI – qualified transportation fringe benefits

  • UBTI – more than one trade or business

Have questions regarding the TCJA and your tax-exempt organization? We can help.

While the law has wide-ranging implications, numerous provisions specifically affect tax-exempt organizations, including public charities, social welfare organizations, colleges and universities, healthcare organizations, associations, and private foundations. If you have additional questions regarding the Tax Cuts & Jobs Act and your nonprofit organization, nonprofit attorney Jonathan Grissom can help. Please contact us via the button below.

Tax ComplianceJonathan Grissom, AttorneyTax Cuts & Jobs Act, TCJA