TrimnerBeckham, based in the Washington DC metropolitan area, provides tax consulting and compliance solutions to nonprofit organizations. We help tax-exempt organizations file accurate and complete tax returns that enhance their public image.
Siloing may be required for NOL Carrybacks
The CARES Act signed in March permits a five-year carryback for NOLs generated after 12/31/17 and before 1/1/21.
The IRS recently issued an FAQ that explains how the siloing rules (IRC Sec. 512(a)(6)) must be applied to such carrybacks. The FAQ explains that an NOL carried back to a tax year that began before 12/31/17 can be applied against the aggregate UBI from that year, but an NOL carried back to a tax year that began after 12/31/17 can only be applied to net income from the same silo.
Treasury Releases Proposed Regs on Excess Executive Compensation
The IRS and the Treasury Department have released 44 pages of proposed Regulations related to excess executive compensation paid by nonprofits.
IRC Sec. 4960 imposes an excise tax of 21% on remuneration above $1Million and on excess parachute payments.
Among other things, the proposed Regs clarify that:
TAKEAWAY: All nonprofits must keep track of the five highest-compensated employees from 2018 forward, even if those employees earn less than $1Million, and even if those employees are compensated by a common paymaster.
Goodbye, Schedule B!
Well, not completely. Every tax-exempt organization that receives a contribution of $5,000 (or the special 2% rule) or more from a single contributor must still attach Sch B, but only 501(c)(3) and 527 organizations must enter the names and addresses of those donors. See our video posted above for a complete explanation of the new Regulations, finalized by the IRS on May 27, 2020.
REMINDER: Next Major Nonprofit Tax Deadline: November 15, 2020.
Organizations using a December year-end: Extended due date is November 15.
Organizations using a June year-end: Initial due date is November 15.
Organizations using a March year-end: Extended due date is February 15, 2021.
Organizations using a September year-end: Initial due date is February 15, 2021.
PARKING TAX REFUNDS!
On Friday, December 20, 2019, the President signed the ‘Further Consolidated Appropriations Act of 2020,” retroactively repealing the tax on transportation fringe benefits. For more information, see our Form 990 Tip of the Week article.
If you paid tax and want a refund, you must file an amended Form 990-T. Write “Section 512(a)(7) refund” across the top for faster processing. Filing an amended return should result in the automatic abatement of interest and penalties related to the tax.
If you didn’t pay tax but you want to adjust an NOL, you are NOT required to amend the 990-T. However, if you utilize the NOL in a future year, you should attach a statement explaining why the NOL you are claiming differs from the filed returns.
PRIVATE FOUNDATION FLAT TAX
The ‘Further Consolidated Appropriations Act of 2020,” also eliminated the 1% and 2% tax brackets for investment income of a private foundation and replaced them with a flat 1.39% tax rate. Details can be found in our article, Form 990 Tip of the Week.