A New Federal Tax Law May Tax Churches and Nonprofit Organizations

A new tax law may tax churches and nonprofits, and you should know about it.

Subsection 512(a)(7) of the new tax law passed last December provides that certain benefits such as employee parking on property owned by churches and nonprofit organizations which have value or cost and will be considered “Unrelated Business Activities,” which may be taxed at the for-profit corporate tax rate of 21 percent.

Please wrap your head around this crazy idea: Tax-exempt organizations that diligently serve our communities, including churches, could be required to file a federal tax return (form 990-T) and pay taxes for permitting their employees to park on their tax-exempt property. (the U.S. Treasury Department is required to provide guidance on this matter, but such guidance has not materialized on taxes effective Jan. 1, 2018)

Donations to charities should be used for direct services and program operating costs, and not be used to pay any federal taxes by the charitable non-profit organizations that serve our communities. These charities provide food for the hungry, support the disadvantaged, shelter the homeless, keep our children safe, provide medical care and serve as houses of worship. These are the needs our nonprofits and churches are asked to meet daily. Their precious time and resources should not be used to determine their tax liability through federal tax forms, nor should they potentially pay nonsensical federal taxes.

The obscure subsection 512(a)(7) of the new tax code appears intrinsically onerous on mid to larger sized churches and nonprofits, depending on implementation guidelines that are yet to be provided. Some of our local nonprofits may have already incurred tax liabilities - without even knowing it.

Throughout my life, I have been inspired and motivated through involvement in the good works of our churches and other tax-exempt organizations from my youth through adulthood. In addition, as an employee of San Angelo Area Foundation over the past sixteen years, I have witnessed first-hand the invaluable impact of tax-exempt organizations.

On behalf of the numerous nonprofit organizations that I have had the privilege of serving and all those that provide services to the communities of our region, as well as those across our great nation, I appeal to all our elected officials to repeal these offensive and inane provisions buried deep inside the Tax Act.

I appreciate that our own Congressman Mike Conaway’s efforts to repeal this new tax is a start, through his filing H.R. 6037, the “Nonprofits Support Act” on June 7, 2018. We are grateful for Mike’s understanding that taxes on tax-exempt organizations make no sense. Senator Ted Cruz has filed a companion bill (S. 3317) in the Senate on July 31, 2018, but we must have other representatives and senators get on board and get this law fixed. https://www.congress.gov/bill/115th…

If you agree with me, be sure to support Congressman Conaway and Senator Cruz’s efforts and encourage other elected leaders around our state and country to wake up and repeal this onerous sub-section of the new tax law.