Serving Nonprofits. Strengthening West Virginia.

Tax Reform Updates

1/27/20 UPDATE: IRS Issues Guidance for Reclaiming Transportation UBIT Payments

In late December, Congress retroactively repealed the tax on nonprofit transportation benefits thanks to concerted advocacy efforts by thousands of nonprofits and bipartisan support for the work of charitable nonprofits, houses of worship, and foundations. Immediately upon repeal, nonprofits began asking whether and how they can recoup the taxes they paid on a law that no longer exists. As previously reported, House Ways and Means Committee Chair Neal (D-MA) and Oversight Subcommittee Chair Lewis (D-GA) sent a letter to the IRS Commissioner asking for an expedited process so nonprofits could quickly secure refunds. This past week, the IRS issued guidance designed to do just that: help nonprofits quickly get back the money they paid in 2018 and 2019 on the now-repealed tax on nonprofit transportation benefits. The guidance instructs nonprofits to file amended Form 990-Ts and write “Amended Return – Section 512(a)(7) Repeal” at the top so IRS officials will know what it is and what to do with it. Read the IRS guidance: How To Claim a Refund or Credit of Unrelated Business Income Tax (UBIT) or adjust Form 990-T for Qualified Transportation Fringe Amounts.

3/25/19 UPDATE: Tell Congress to Repeal the Nonprofit Transportation Tax ASAP

The 2017 Tax Cuts and Jobs Act imposes a 21-percent income tax on expenses for nonprofit employee transportation benefits. In December 2018, the Treasury Department and the IRS provided partial guidance on how to calculate this new tax on parking expenses, but assumes that all expenses for bus and transit passes are subject to the tax. In both parking and transit benefits, the government will require the nonprofit employer to pay the 21-percent tax on amounts employees request to be withheld from their paychecks pursuant to voluntary compensation reduction agreements. Learn more about this tax.

There is broad, bipartisan support for repealing this tax on tax-exempt organizations. In fact, there is not a Senator or Representative on record supporting keeping the tax. The problem is timing: left on its own, Congress won’t get around to repealing the nonprofit transportation tax until later this year or next, if at all. Partisan differences on unrelated tax issues are delaying action on this nonpartisan, but urgently needed fix. Congressional leaders essentially are delaying repeal of the tax on tax-exempt organizations now as a negotiating tactic for other issues they consider higher priorities. Charitable organizations must deliver the message loudly and forcefully: Don’t hold community nonprofits hostage to partisan bickering; repeal the nonprofit transportation tax before April 15.


  1. Sign onto the Nonprofit Letter Calling for Immediate Repeal of the Transportation Tax: Join the WVNPA and hundreds of charitable nonprofits, houses of worship, foundations, and nonprofit associations from across the country in urging congressional leaders “to take action immediately to fully repeal this undue and burdensome UBIT on tax-exempts” by signing your organization onto the letter as soon as possible. (Read the letter.) Deadline: March 27
  2. Contact our Senators and Representatives: Call your Representative at 202-225-3121 and our Senators at 202-225-3121 and tell them the transportation tax on nonprofits is unfair and burdensome, and must be repealed immediately. Partial guidance from the IRS issued on December 10 is incomplete, costly, and raises even more confusion. Tell them that nonprofits – charitable organizations, houses of worship, and foundations – are all united in opposition to this tax. You can also email your Representative and Senators  and tweet them with the same message.

11/9/18 UPDATE: IRS Gets an Earful on SALT and State Tax Credit Proposed Regulations

From the National Council of Nonprofits: Most of the witnesses at a public hearing this week on the IRS’ proposed regulations limiting the value of some charitable deductions delivered a simple message: trash this draft and go back to the drawing board. In August, Treasury and the IRS published draft regulations that, if implemented as written, would require taxpayers to deduct the value of any state tax credit from the amount they claim as federal charitable deductions. The proposal reportedly targets new tax laws in ConnecticutNew Jersey, and New York that seek to convert some state and local tax (SALT) payments that are capped at $10,000 under the 2017 federal tax law into uncapped charitable deductions. As written, however, the draft regulations would also to apply to many programs in the 32 states and the District of Columbia that provide a state or local tax credit when a taxpayer makes a donation to certain nonprofits, such as school choice scholarship funds. Twenty-four speakers addressed the IRS at the hearing, echoing the views in the more than 7,700 written comments, most of which expressed outright opposition or requested changes to the draft regulations. Andrew J. Bowman of the Land Trust Alliance warned that the proposed regulations will result in fewer donations of lands due to the breadth of the tax credits affected, adding that the proposals are “already having a chilling effect on conservation.” Supporters of the proposed rules at the hearing were the School Superintendents Association and the Institute on Taxation and Economic Policy. It is not clear when Treasury and the IRS will move to finalize the proposal or whether changes will be made that reflect the public comments.

9/17/18 UPDATE: More Information on State Tax Credits Related to Federal Tax Reform


9/11/18 UPDATE: State Tax Credits Related to Federal Tax Reform

From Philanthropy WV
Proposed federal regulation changes related to the state tax credits by the IRS will:

  • Impact those who will itemize their charitable deduction on their federal tax reforms starting in 2019 under the new federal reforms. (It is estimated the number of itemizers in WV will reduce significantly with the doubling of the standard deduction)
  • Still have value for your NIP tax credits on your state income taxes, but could reduce your level of deductions on your federal tax return (if you itemize)

From the Community Foundation for the Ohio Valley: If you itemize deductions on your Federal Income Tax Return, please be aware that the IRS is currently reviewing State Tax Credit Programs.  As a result of this review, taxpayers who itemize on your federal tax reforms may have their deductions reduced by the amount of State Tax Credit they receive. Taxpayers who do not itemize will see no change based on State Tax Credits.  We encourage you to consult with your tax advisor for professional tax advice regarding this matter.” 

We will be bringing you more updates on Tax Reform’s potential effects on NIP tax credits in the coming weeks.

5/29/18 UPDATE: Take Action – Delay Taxes on Tax-Exempt Nonprofits

Your nonprofit organization likely is already liable for new unrelated business income taxes (UBIT) as the result of the major federal tax law enacted in December. But relief is a possibility with collective action. Join the National Council of Nonprofits, the American Institute of Certified Public Accountants, the American Society of Association Executives, and many others in calling on the Treasury Department and the IRS to delay new UBIT liabilities unless and until the government provides clear guidance. Learn more at Taxing Tax Exempts and Other Oxymorons in the New Tax Law.

Go to the IRS public comment form and insist that Treasury and the IRS delay implementing the two new UBIT subsections until one year after Final Rules are promulgated. (Fill in “Form 990-T” in the line: Form/Instruction/Publication Number.)