WASHINGTON—An official with the IRS indicated that the agency is working to update tax forms and guidance related to excise taxes paid on executive compensation and unrelated business income tax (UBIT) to reflect changes made in the tax reform package passed last year.
IRS Exempt Organizations Director Margaret Von Lienen told attendees at the American Institute of Certified Public Accountants' (AICPA) Not-for-Profit Industry Conference that tax form 4720 is being revised so that exempt organizations can report and pay two new excise taxes created by the tax law. One of them is the 21% excise tax that all tax-exempt organizations – including both federal and state-chartered credit unions – must now pay on executive compensation over $1 million.
Von Lienen also said the new forms, which the agency hopes to have available by January 2019, will be accompanied by guidance, but did not say when the guidance will be released, NAFCU noted in its analysis.
Concerns Shared
NAFCU has already shared with the IRS credit unions' concerns about the excise tax's impact on the industry and desire for guidance to ensure parity between for-profit and not-for-profit corporations. Implementation of the executive compensation excise tax has been included in the IRS' updated priority guidance plan.
The IRS is also updating tax form 990-T so that tax-exempt entities can report UBIT for each separate trade or business, as is now required by the law. Prior to Jan. 1, organizations could aggregate income from UBIT and offset income from one business with a loss from another. UBIT applies to state-chartered credit unions, NAFCU noted.