New Tax Law =
New UBIT Liability for Nonprofits

Here in Oregon a lot of our nonprofit organizations embrace the concepts of environmental sustainability. Your nonprofit may even encourage employees to take public transportation. You may use this mission-value aligned approach as a recruitment tool because job candidates expect that from the best places to work. As a result, let's say your nonprofit has in the past provided financial assistance to make it easier for employees to commute to work (such as contributing to the cost of a mass-transit pass or parking). Guess what? Because of the new federal tax law, your nonprofit must now pay a penalty tax - Unrelated Business Income Tax or UBIT for providing those incentives, even if employees pay for them through pre-tax contributions via a qualified plan.

This short podcast by our colleagues at the National Council of Nonprofits will give you the background and explain the new tax treatment  that is effective right now - regardless of when your nonprofit's tax year starts. The Council of Nonprofits and NAO agree with many professional tax law advisors that this development isn't good news for nonprofits. We are very concerned that this aspect of the new tax law is taking many nonprofits by surprise, and that nonprofits that have never before had to file UBIT forms with the IRS will now be penalized for late or inaccurate filings. The informal understanding is that the IRS may issue guidance during the summer, but the filing deadlines for the 990-T and quarterly estimated payments for many nonprofits are due well before then.
TAKE ACTION NOW! Join us in filing comments to the IRS explaining how this new UBIT will impact your nonprofit and its workforce. Be sure to request that the effective date be postponed until the IRS studies this more and publishes more guidance. (See comments  filed by ASAE, as an example.)

Adapted from the National Council of Nonprofits