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Resources

Tax Tips

  • IRS willing to consider requests for relief from double taxation related to repatriation
  • Form 1040-SR: Seniors Get a New Simplified Tax Form for 2019
  • IRS Issues 2020 Standard Mileage Rates
  • Proposed regs. Issued on Meal and Entertainment Expense Deductions
  • Guidance and Enforcement Put Virtual Currencies Front and Center
  • IRS Increases Visits To High-Income Taxpayers Who Haven’t Filed Tax Returns
  • New Law Helps People Save For Retirement; Other Retroactive Changes Impact Many Taxpayers
  • SBA’s NEW YEAR RESOLUTION ENFORCEMENT!
  • NEW TAX DEADLINE IN THE WORKS
  • U.S. Postpones April 15 Tax Payments for 90 Days for Most Americans
  • The Three Step Process: Disaster Loans
  • Emergency Paid Sick Leave Act (EPSLA)
  • Attention Local Workers Whose Job Has Been Affected by the Coronavirus
  • Federal Income Tax Filing Date postponed to July 15
  • FAQs About COBRA Insurance Coverage
  • IRS announces Form 1040-X electronic filing options coming this summer; major milestone reached for electronic returns
  • IRS Won’t Extend Deadline Again! Tax Returns ARE Due by July 15
  • 2020 depreciation limits for cars and trucks are issued
  • SBA Issues Extensive Final Rule Revising Several Small Business Contracting Regulations
  • Business Education Series: PPP Round Two – What You Need to Know
  • Maryland Extends State Income Tax Filing Deadline to July 15th
  • IRS Announces New Extended Tax Deadline for Individuals
  • Taxpayers can protect themselves from scammers by knowing how the IRS communicates
  • CHILD TAX CREDIT
  • Don’t forget to factor 2022 cost-of-living adjustments into your year-end tax planning
  • IRS Suspends Several Automated Collection Notices
  • SBA Issues Final Rule On Calculation Of Average Annual Receipts For The Purposes Of Certain Size Standards
  • Tax Law Changes effective 2022
  • Under legislation enacted by the 2022 General Assembly Virginia established a new elective pass-through entity (“PTE”) tax.
  • INFLATION REDUCTION ACT HIGHLIGHTS
  • Taxability of Lawsuit Settlements
  • IRS Lowers Mileage Rates for 2020 Deductible Vehicle Use
  • Jan. 31 filing deadline remains for employer wage statements, independent contractor forms
  • IRS: Eligible employees can use tax-free dollars for medical expenses
  • Overview VA SIT update
  • IRS Advises Taxpayers To Be On The Lookout For New SSN Scam
  • IRS Provides Guidance on Paying Repatriation Tax
  • Foreign Financial Asset Reporting Guidance Matrix Form 8938 and/or FBAR for Filings
  • Certain Fringe Benefits Provided by Not-for-Profits May Be Considered Taxable Income

Newsletters

Our regularly updated newsletter provides timely articles to help you achieve your financial goals.

Certain Fringe Benefits Provided by Not-for-Profits May Be Considered Taxable Income

TCJA, also known as the Tax Cuts and Jobs Act of 2017, contains changes to fringe benefits that may impact not-for-profit organizations significantly, resulting in unexpected tax liabilities.

One of the most impactful changes is that certain employer-provided fringe benefits are now considered unrelated business income (UBI), which is subject to income tax at the organizational level.

Fringe Benefits Classified as UBI

As of January 1, 2018, the following fringe benefits are classified as UBI:

  • Qualified transportation benefits. These include commuter vehicle and vanpooling as well as transit passes and vouchers for mass transit, such as buses and trains.
  • Qualified parking facility. This includes parking provided by an employer and parking reimbursements provided under a bonafide reimbursement arrangement.
  • On-premises athletic facility. These are facilities predominately used by employees and their families.

Although organizations will now have to pay UBI taxes for these benefits, the benefits will continue to be tax-free for employees—but subject to monthly limits.

Compensation-Reduction Agreements

A compensation-reduction agreement is a way to provide employees with qualified transportation benefits on a pretax basis. Many tax-exempt entities believe this is a safe arrangement that isn’t subject to UBI, but this may not be the case.

The IRS’s Publication 15-B (2018), Employer’s Tax Guide to Fringe Benefits, provides guidance on the treatment of qualified transportation benefits. Transportation benefits are no longer deductible for for-profit entities beginning in 2018—even when a compensation-reduction agreement is in place. However, the publication doesn’t specify that a compensation-reduction agreement used by a tax-exempt entity will create UBI.

In March 2018, IRS deputy associate chief counsel Janine Cook stated that because a pre-tax transportation benefit is no longer deductible for for-profit entities, it qualifies as UBI for tax-exempt organizations under the new Internal Revenue Code Section 512(a)(7).

This statement demonstrates that although tax law doesn’t specify that a pretax arrangement escapes UBI, IRS guidance and comments indicate UBI may be created under similar arrangements.

Some organizations may be located in jurisdictions that require employers to provide transportation benefits. It’s uncertain if any relief would be provided in these cases.

 

Taxable Benefits to Employees

Organizations that treat employee fringe benefits as taxable W-2 wages—by paying Federal Insurance Contributions Act and Medicare taxes, for example—won’t be affected by this change. Benefits in those instances aren’t subject to UBI taxes.

Here to Help

Should you have any questions about this email please feel free to contact us at info@millermusmar.com

Please be advised that, based on current IRS rules and standards, the advice contained herein is not intended or written by the practitioner to be used and cannot be used by the taxpayer for the purpose of avoiding penalties.

MillerMusmar, CPA’s is an established accounting firm with offices in Reston, Virginia and Manassas, Virginia. We have a twenty-year history of providing top quality auditing, tax, and accounting services to clients throughout the Washington Metropolitan area and beyond. By combining the expertise of a mid-sized firm with the personal attention, we are both large and small enough to deliver the responsive service our clients need. For more information, please visit our website at  www.MillerMusmar.com

Please feel free to contact us to discuss how we can work with you to achieve your goals.
MillerMusmar is committed to the professional standards of
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Reston, VA Office

MillerMusmar CPAs
2100 Reston Parkway Suite 400
Reston VA 20191
Phone: +1-703-437-8877
Fax: 703-437-8937
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MillerMusmar CPAs
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Manassas, VA 20109
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Fort Worth, TX 76108
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MillerMusmar CPA’s
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Email: info@millermusmar.com
Phone: (703) 437-8877
Fax: (703) 437-8937