With “Taxmageddon” Looming, Latest EO Excise Tax Info and Future Plans
First and most directly relevant to the 2017 tax law changes, the IRS recently provided figures for calendar year 2023 excise taxes reported for charities, private foundations, and split-interest trusts on Form 4720. These figures included the section 4960 tax on excess executive compensation, which collected $570 million from 1,274 organizations and the section 4968 tax on net investment income of private colleges and universities, which collected $381 million from 56 organizations. While both provisions are permanent and therefore do not need to be renewed, Congress certainly could modify them in 2025, especially the latter tax given current political rhetoric surrounding universities.
Recent data is unfortunately not available for the unrelated business income tax, so the effects of the 2017 section 512(a)(6) UBTI silo rule are still unknown. But Congress does not appear to be any interest in revisiting this permanent rule change.
The Treasury 2024-2025 Priority Guidance Plan indicates that guidance relating to the 2017 tax changes has been completed, as the mostly continuing guidance projects all relate to other topics (including many that pre-date 2017). The one significant new item that could be relevant in 2025 is section 501(r) guidance, particularly given the continuing bipartisan interest, exemplified by the recent letter to the IRS from Senators Warren and Grassley, in the activities of charitable nonprofit hospitals.
And of course all this activity is against the backdrop of the ongoing attempts by the Tax Exempt & Government Entities to continue to improve its operations and modernize, as detailed in its Fiscal Year 2025 Program Letter. How those plans will be affected by the election results and hostility of both the incoming Trump Administration and the Republicans majorities in Congress remains to be seen.
Lloyd Mayer