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Nonprofits Seek More Clarity on Contributions Accounting

Almost one year has passed since the Financial Accounting Standards Board (“FASB”) released guidance for contributions accounting, but several nonprofit organizations still struggle with understanding the new provisions. At a March 4 meeting on accounting needs and concerns impacting the nonprofit industry, the FASB’s Not-for-Profit Advisory Committee acknowledged that nonprofits need more guidance to apply Accounting Standards Update No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The advisory panel argued that the nonprofit sector needs assistance with accounting for cost-sharing rules, in particular government agreements. The panel suggested nonprofits need. Read More.

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Proposed State Legislation Addresses Charitable Giving Tax Credits

Several states are introducing bills to counter the negative effects of the Tax Cuts and Jobs Act, especially regarding charitable giving. The new tax law nearly doubles the standard deductions for individuals ($12,000) and couples ($24,000), which makes it less likely that taxpayers will claim itemized deductions when filing this year. Lawmakers in Kansas, New York and Virginia have proposed allowing taxpayers to claim itemized deductions on state returns, even when the standard deduction on federal returns is elected. The Virginia bill also proposes a nonrefundable tax credit to taxpayers that forgo itemizing deductions on federal returns. Arizona legislation has. Read More.

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Congress to Review Charitable Giving Tax Deduction Act

In response to the Tax Cuts and Jobs Act, Representatives Chris Smith, R-N.J., and Henry Cuellar, D-Tx., have sponsored a bill to expand charitable giving tax incentives. The Charitable Giving Tax Deduction Act would offer taxpayers a charitable deduction regardless if they itemize deductions. Rep. Cueller said the bill encourages giving back to communities and ensures taxpayers that opt not to itemize receive a deduction for charitable giving. Rep. Smith commented that charitable organizations depend on taxpayers’ generosity and could also benefit under the bill.

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IRS Issues Parking Tax Preliminary Guidance

Back in December, the Internal Revenue Service (“IRS”) issued preliminary guidance that proposes clarifications to when nonprofit organizations should pay a 21 percent unrelated business income tax on employer expenses associated with employee parking. The notice tells nonprofits to use a four-step calculus for applying a value on taxable parking spaces. Another notice permits tax penalty waivers for nonprofits that did not submit quarterly estimated tax payments regarding those transportation benefits. The IRS had not issued any guidance or relief for applying the tax on other transportation benefits like subway or bus passes. Nonprofits impacted by the tax on parking expenses can submit comments. Read More.

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IRS Proposes Guidance for Taxing Highly Compensated Employees

After issuing preliminary guidance clarifying when nonprofits must pay the 21 percent unrelated business income tax related to employee parking, the Internal Revenue Service (“IRS”) has published Notice 2019-09 explaining when nonprofit employers should pay the 21 percent tax on employees with an annual compensation above $1 million. The preliminary guidance advises nonprofits to use the calendar year ending within their fiscal year to calculate the tax. In addition, nonprofits cannot avoid the tax by dividing highly compensated employees’ compensation between multiple related organizations. Comments on the noticed are due Tuesday, April 2.

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California Community Colleges Reject Tuition-Free Plan

Amid concerns about high default rates, several California community colleges are rejecting the state’s plan that offers in-state students one year of free tuition. California awards community colleges free tuition aid for participating in the plan, but institutions like Barstow College and Imperial Valley College disagree with the mandate requiring participation in the federal student loan program. The San Bernardino district referenced the recent high federal loan default rate among borrowers at its colleges for rejecting participation in the tuition-free plan. Meanwhile, California Community College system officials oppose the move and believe colleges that aren’t taking part in the federal. Read More.

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