WASHINGTON—As the House this week continues work on its tax extenders and packages of fixes (H.R. 88), leaders of the tax-writing committee are being urged to provide a technical fix to the Tax Cuts and Jobs Act (TCJA) so a 21% excise tax is not imposed on certain not-for-profits in any year-end tax bill.
NAFCU Vice President of Legislative Affairs Brad Thaler asked in a letter to the committee that a fix be provided to "grandfather" those employment contracts entered into on or before Nov. 2, 2017, for tax-exempt employers.
The TCJA contained a provision allowing for-profits to grandfather in binding contracts in effect before that date, but did not include the same clause for not-for-profit tax-exempt organizations.
H.R. 88 was revamped by House Ways and Means Committee Chairman Kevin Brady (R-TX) to include a provision that repeals the excise tax imposed for fringe benefits, such as transportation and parking, but it does not alter the tax on executive compensation, NAFCU explained.
NAFCU noted that it has repeatedly reached out to and met with members of Congress to seek relief for credit unions from this new tax imposed on certain not-for-profits.
Other Provisions Included
Brady's revised H.R. 88 also includes provisions that would delay and repeal certain taxes under the Affordable Care Act and ease restrictions on political activity by churches and other nonprofits, among other changes. Portions of the original bill relating to disaster tax relief, retirement savings, IRS improvements and corrections to the TCJA remain, NAFCU said.
This week, the IRS issued an interim final rule to implement the TCJA's changes to the treatment of parking-fringe expenses for tax-exempt organizations subject to unrelated business income tax (UBIT), which includes state-chartered credit unions.