Article
Navigating uncharted not-for-profit tax territories
Jan. 5, 2022 · Authored by Larry Mohr, Shelby T. Netz
The not-for-profit industry experienced tremendous change as a result of the COVID-19 pandemic.
With this in mind, Baker Tilly’s Larry Mohr and Shelby Netz recently co-hosted a presentation, “Navigating uncharted tax territories,” as part of the 2021 CACUBO Annual Meeting. Baker Tilly’s presentation focused on the tax-related ramifications of the pandemic facing higher education institutions and other not-for-profit organizations.
In response to Baker Tilly’s question at the opening of the session, most of the participants acknowledged that the pandemic affected their tax compliance process to some degree. The most prevalent of their concerns included experiencing IRS delays (i.e., it has been quite difficult to contact the IRS during the pandemic) and receiving erroneous notices (i.e., this has been a headache for not-for-profit organizations).
Between these specific items, the general impact of the pandemic, recent and proposed tax legislation, and other recently issued guidance, there are quite a few layers of issues challenging not-for-profit organizations.
Key tax legislative changes
Several pieces of notable tax legislation passed over the last two years, and multiple tax legislation proposals may be passed in the near future. Here are some examples that fall into each category.
- Taxpayer First Act (2019) – mandatory electronic filing for Forms 990, 990-PF and 990-T
- Coronavirus Aid, Relief and Economic Security (CARES) Act (2020) – provided emergency relief to higher education institutions, the Paycheck Protection Program and employee retention credit (ERC)
- American Families Plan (changed and merged into the Build Back Better (BBB) Act) – the proposed BBB Act currently excludes the provision for two years of free community college, but increases the maximum Pell Grant available per year
- Accelerating Charitable Efforts Act (proposed) – would change distribution rules for private foundations and donor-advised funds to accelerate distributions from these entities to “working” not-for-profit organizations
