Serving Nonprofits. Strengthening West Virginia.

Tax Reform Updates

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.)