Important Public Policy Updates - January 2020

The IRS issues guidance on refunds for UBIT parking tax

Good news for the Nonprofit Sector! The IRS issued guidance that will help nonprofits quickly get back taxes paid on the now-repealed tax on nonprofit transportation benefits: How To Claim a Refund or Credit of Unrelated Business Income Tax (UBIT) or adjust Form 990-T for Qualified Transportation Fringe Amounts.

The guidance instructs nonprofits to fill amended Form 990-Ts and write at the top “Amended Return – Section 512(a)(7) Repeal” so IRS officials will know what it is and what to do with it.

The White House Office of Management & Budget (OMB ) Proposes Regulations to Improve Uniform Guidance Indirect Cost Rules

The federal rules governing grants to nonprofits would be substantially improved under proposed revisions to the Uniform Guidance published by the OMB. Most notably, the proposed revisions would strengthen the guarantee that grantees receive reimbursement of indirect costs of at least 10 percent of their modified total direct costs (de minimis rate). The draft also clarifies that all granting agencies paying nonprofits with federal funds – whether federal, state, or local governments, native tribes, or other nonprofits – must pay nonprofits using the nonprofit’s existing negotiated indirect cost rates and, if no negotiated rate exists yet, then they have the obligation to negotiate rates, at the option of the nonprofit. To date, various granting agencies have misinterpreted the rules in ways that deny nonprofits’ rights under the Uniform Guidance. In other changes, the proposed rules would provide greater flexibility under procurement standards, implement standard data elements across agencies and grants, promote the collection of data in machine-readable formats, and strengthen end-of-grant closeout procedures and enforcement.

The OMB will host a public forum in Washington, DC on Tuesday, February 4. The public is invited to review the proposed regulations and submit comments by March 22, 2020. Read the National Council of Nonprofits’ analysis of the proposed regulations.

For questions on these or other public policy issues, please contact Sarah@nonprofitmaine.org.