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Exempt Organization Highlights of Spending Package’s Tax Law Changes

While the Further Consolidated Appropriations Act, 2020 (Act) brought about extensions for certain credits and deductions, it also brought the following two changes for exempt organizations:

Parking Tax Retroactively Repealed

The Parking Tax imposed under Internal Revenue Code Section 512(a)(7) has now been retroactively repealed.  Exempt organizations will no longer owe this tax and are entitled to refunds for amounts reported and paid on Forms 990-T in the past.  The IRS is to issue guidance on the process for obtaining these refunds, but this will most likely consist of filing amended Form 990-Ts.

Private Foundation Excise Tax

The Act also established a flat tax rate for private foundation’s excise tax on net investment income at 1.39%, versus the two rate option allowed previously (1% vs. 2%).  The new rate is effective for tax years beginning after December 20, 2019.

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This is just a brief overview of the most relevant provisions for exempt organizations. More details on the other items in this Act can be found in our announcement: Spending Bill Extends Tax Breaks & Adds Retirement Account Provisions.

If you would like to discuss further, please contact your local Blue & Co. advisor.

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