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Tag Archive for Non-Profit Tax

How Are Nonprofits Affected By The Tax Cuts And Jobs Act?

After a lengthy process, Congress and the President did what they had to do in late December 2017 to put into law one of the most significant pieces of legislation in decades: the Tax Cuts and Jobs Act (TCJA). The Act put into place a number of provisions that will affect Not for Profit Organizations. Note the following areas of tax impact that the provisions of the TCJA  brought in relation to Not For Profit Organizations, as noted in Yeo Yeo:

  • Changes the computation of unrelated business taxable income (UBIT) if an organization has more than one unrelated trade or business. It’s possible that more nonprofits will have to pay UBIT. As Nolo explains:

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IRS Now Accepting Simplified Form 1023-EZ For Tax Exempts

Not-for-profit organizations who wanted to be IRS-exempt have long been faced with completing Form 1023. This form is an arduous 26 pages long and the IRS estimates are that it would take as long as 16 hours just to complete the form after spending up to 7 hours learning about the form. Time spent in record keeping is estimated to be up to 100 hours. Obviously, this is not a task for the faint of heart and is a major hurdle to an organization wishing to become tax exempt. In addition, the IRS spends an inordinate amount of time processing these forms and has a backlog of 60,000 applications, which is about a nine-month backlog. Currently, the IRS states that it takes up to 21 days just to acknowledge the application.

This step is necessary for an organization to be qualified as a 501(c)(3) not-for-profit Read more