New Not-for-Profit Tax Developments

The following are some recent tax-related developments of interest to nonprofit organizations.

Donee reporting regulations. The IRS has withdrawn proposed regulations regarding the contemporaneous written acknowledgments taxpayers must have on hand to substantiate their charitable contributions of $250 or more. The regulations would have given organizations the option of reporting the information their donors require for substantiation purposes on a new IRS information return to be sent to the IRS and the donor.

Although the proposed donee reporting method was to be optional, organizations and charity regulators expressed concerns about it. A key concern was the potential for taxpayer identity theft, since organizations electing to use the new method would have been required to obtain, store, and send to the IRS their donors’ personal information (names, addresses, and Social Security or other taxpayer identification numbers).

Social welfare organizations. The IRS has announced its intention to issue temporary regulations implementing a new tax law provision added by the Protecting Americans from Tax Hikes (PATH) Act of 2015 that requires a Code Section 501(c)(4) social welfare organization formed after December 18, 2015, to provide the IRS with notification that it is operating as a Code Section 501(c)(4) organization. Certain existing social welfare organizations also must provide the notification. Affected organizations will have at least 60 days from the date the regulations are issued to submit the notification.

Transportation fringe benefits. For 2016, employers may provide up to $255 a month in transit passes or transportation in a commuter highway vehicle as a nontaxable fringe benefit. This figure reflects the PATH Act provision creating parity between the exclusion for transportation fringe benefits and the exclusion for qualified parking benefits.