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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.

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Breaking News

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:

  1. Remuneration is calculated based on a calendar year.
  2. There is no minimum threshold for determining the five highest-compensated employees. Once an employee is covered, they remain covered for all subsequent years.
  3. Determination of the five-highest compensated employees is made at the entity level, not for a group of related organizations.
  4. Where an employee of one organization serves as a volunteer for a related nonprofit organization, the nonprofit is not considered the employer and the excise tax does not apply.
  5. Where an employee of one organization spends more than 10% of their time providing services to a related nonprofit, then the nonprofit is subject to the excise tax.
  6. The tax applies to federal instrumentalities.
  7. The tax applies to foreign organizations unless they receive substantially all their support from outside the USA.

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.

Resources

Many nonprofits prefer that the audit firm also prepare the tax return.  Because the audit represents ten times the hours of the tax work (and ten times the fe
David Trimner has provided tax consulting services to nonprofit organizations for over 20 years.  While he is not an auditor, he has worked for several aud

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